Does Better Blend have an obligation to cure a franchisee's default under the franchise agreement?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the Better Blend franchise agreement does not explicitly state that Better Blend Franchising, LLC (BBF) has an obligation to cure a franchisee's default. However, the agreement outlines various circumstances under which BBF may take action, including temporary management of the business under certain conditions.
Specifically, if a Better Blend franchisee is operating the business in a manner that poses a danger to health or safety, BBF has the option, but not the obligation, to enter the location and manage the business. This temporary management can occur if the Principal Executive dies or becomes incapacitated, if the Franchise Agreement is terminated or expires and BBF elects to purchase assets of the Business, or if 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. 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).
During any period of temporary management, Better Blend will account to the franchisee for all net income from the business, provided the Franchise Agreement has not been terminated or expired. BBF may also collect a temporary management fee equal to 10% of Adjusted Gross Sales for the period in which BBF operates the Business, plus all expenses. This clause allows Better Blend to step in and rectify operational issues, but it does not create a formal obligation to cure defaults. A prospective franchisee should clarify with Better Blend the specific conditions under which BBF might assist in curing a default and what resources or support they might provide.