Is failure to pay amounts due to Bevaris Alliance considered a material breach?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.1 Termination for cause by Franchisor. The Franchisor may terminate this agreement with immediate effect (or following such notice period as it sees fit) without prejudice to any of its rights or remedies, by giving written notice to the Franchisee and the Individual if:
- (a) the Franchisee or Individual fails to pay any amount due under this agreement on the due date for payment and remains in default not less than 7 (seven) days after being notified in writing to make such payment; or
- (b) the Franchisee or Individual commits a material breach of any term of this agreement (other than failure to pay any amounts due under this agreement), the Manual, or any other written agreement between the Franchisor and Franchisee or involving the Franchisee though Franchisee is not a party to such other written agreement (such as a Food Service Agreement) and (if such breach is remediable) fails to remedy that breach (or adequately assist Franchisor in the remedy of a Food Service Agreement) within a period of 14 (fourteen) days after being notified in writing to do so; or
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, failure to pay amounts due under the franchise agreement is grounds for termination, but is not automatically considered a material breach. Specifically, Bevaris Alliance may terminate the agreement if a franchisee fails to pay any amount due and remains in default for at least seven days after receiving written notice to make the payment.
However, the FDD also states that Bevaris Alliance can terminate the agreement if the franchisee commits a material breach of any term of the agreement. But this clause excludes the failure to pay amounts due, as it is addressed separately. If the breach is something that can be fixed, the franchisee has 14 days after written notification to remedy the breach.
This distinction is important for prospective franchisees. While failure to pay can lead to termination after a short cure period, other breaches allow for a longer period to remedy the issue. Franchisees should ensure they understand the payment terms and have a plan to manage their finances to avoid falling into default. They should also be aware of what constitutes a 'material breach' beyond payment issues and the remedies available to them.