Is Better Blend obligated to cure a franchisee's default?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
nefit the System or the Better Blend brand include enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization, and improving the competitive position of the System and Better Blend outlets.
- 11.13 Temporary Management. If (i) the Principal Executive dies or becomes incapacitated, (ii) this Agreement is terminated or expires and BBF elects to purchase assets of the Business as provided in Section 14.6, or (iii) Franchisee is operating the Business in a manner which, in BBF's reasonable opinion, constitutes a danger to the health or safety of any person, then BBF may (but is not obligated to) enter the Location and operate and manage the Business for Franchisee's (or Franchisee's estate's) account until this Agreement is terminated, the Business is transferred, the Business is purchased by BBF, or BBF returns the Business to Franchisee. BBF's operation and management will not continue for more than 90 days without Franchisee's consent (or the consent of the representatives of Franchisee's estate). If this Agreement has not terminated or expired, then BBF will account to Franchisee for all net income from the Business during the period in which BBF operates the Business. BBF may collect a temporary management fee equal to 10% of Adjusted Gross Sales for the period in which BBF operates the Business, plus all expenses
(including internal costs of personnel and overhead) incurred by BBF, which is in addition to Royalty Fees, Marketing Fund Contributions, or other amounts owed under this Agreement. If BBF or a third party assumes the Business's management, Franchisee acknowledges that BBF or the third party will have a duty to utilize only reasonable efforts and will not be liable to Franchisee or its Owners for any losses the Business incurs or obligations to creditors.
11.14 Temporary Public Safety Closure. If BBF discovers or becomes aware of any aspect of the Business which, in BBF's opinion, constitutes an imminent danger to the health or safety of any person, then immediately upon BBF's order, Franchisee must temporarily cease operations of the Business and remedy the dangerous condition. BBF shall have no liability to Franchisee or any other person for action or failure to act with respect to a dangerous condition.
ARTICLE 12. MARKS
- 12.1 Authorized Marks. Franchisee shall use no trademarks, service marks or logos in connection with the Business other than the Marks. Franchisee shall use all Marks specified by BBF, and only in the manner as BBF may require. Franchisee has no rights in the Marks other than the right to use them in the operation of the Business in compliance with this Agreement.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend is not obligated to cure a franchisee's default; however, under certain conditions, Better Blend may choose to temporarily manage the business. If the Principal Executive dies or becomes incapacitated, if the Franchise Agreement is terminated or expires and Better Blend elects to purchase assets of the Business, or if the Franchisee is operating the Business in a manner which, in Better Blend's reasonable opinion, constitutes a danger to the health or safety of any person, then Better Blend may, but is not obligated to, enter the Location and operate and manage the Business for Franchisee's account until certain conditions are met.
Better Blend's operation and management will not continue for more than 90 days without Franchisee's consent (or the consent of the representatives of Franchisee's estate). If the Franchise Agreement has not terminated or expired, then Better Blend will account to Franchisee for all net income from the Business during the period in which Better Blend operates the Business. Better Blend may collect a temporary management fee equal to 10% of Adjusted Gross Sales for the period in which Better Blend operates the Business, plus all expenses.
Better Blend can deem a franchisee in default under various conditions. These include if the franchisee refuses to cooperate with any audit or inspection by Better Blend, operates the business in a manner that poses a significant danger to health or safety without curing it within 48 hours of notice, fails to meet health inspection standards two or more times in a 36-month period, fails to achieve a passing score on an inspection conducted by BBF two or more times in any 36-month period, receives two or more notices of default and commits another breach of the Agreement within a 12-month period, or if the franchisee is charged with or convicted of a felony. These conditions allow Better Blend to protect its brand and system standards, but do not obligate Better Blend to cure the default.