Under what circumstances can Better Blend unilaterally terminate a franchise agreement?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- (ix) Franchisee refuses to cooperate with or permit any audit or inspection by BBF or its agents or contractors, or otherwise fails to comply with Section 10.5 or Section 11.2;
(x) the Business is operated in a manner which, in BBF's reasonable judgment, constitutes a significant danger to the health or safety of any person, and Franchisee fails to cure such danger within 48 hours after becoming aware of the danger (due to notice from BBF or otherwise);
(xi) Franchisee fails to meet the health inspection standards described in Section 7.3(e) two or more times in any 36-month period;
(xii) Franchisee fails to achieve a passing score on an inspection conducted by BBF two or more times in any 36-month period;
(xiii) Franchisee has received two or more notices of default (or a single notice of more than one default) and Franchisee commits another breach of this Agreement, all in the same 12-month period;
(xiv) BBF (or any affiliate) terminates any other agreement with Franchisee (or any affiliate) due to the breach of such other agreement by Franchisee (or its affiliate) (provided that termination of a Multi-Unit Development Agreement with Franchisee or its affiliate shall not give BBF the right to terminate this Agreement);
(xv) Franchisee or any Owner is charged with, pleads guilty or no-contest to, or is convicted of a felony; or
(xvi) Franchisee or any Owner is accused by any governmental authority or third party of any act, or if Franchisee or any Owner commits any act or series of acts, that in BBF's opinion is reasonably likely to materially and unfavorably affect the Better Blend brand.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend can terminate the franchise agreement under various circumstances. These include refusal to cooperate with audits or inspections, failure to comply with specific sections of the agreement, operating the business in a way that poses a significant danger to health or safety if not cured within 48 hours, and failing to meet health inspection standards or achieve a passing score on Better Blend's inspections multiple times within a 36-month period. Additionally, Better Blend can terminate the agreement if the franchisee receives multiple notices of default within a 12-month period and commits another breach.
Better Blend may also terminate the agreement if any other agreement between Better Blend (or its affiliate) and the franchisee (or its affiliate) is terminated due to a breach by the franchisee. Furthermore, the agreement can be terminated if the franchisee or any owner is charged with, pleads guilty or no-contest to, or is convicted of a felony. Finally, Better Blend can terminate the agreement if the franchisee or any owner is accused of any act that, in Better Blend's opinion, is reasonably likely to materially and unfavorably affect the Better Blend brand.
These termination clauses are typical in franchise agreements, as they protect the franchisor's brand and system standards. However, prospective franchisees should carefully review these conditions to understand their obligations and the potential consequences of non-compliance. The franchisee should pay close attention to the cure periods allowed for certain defaults, as well as the subjective standards Better Blend may use in determining whether certain actions are detrimental to the brand.