What constitutes default under the terms of the Bft Franchise Agreement that could lead to termination?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
(f) A Restricted Party fails to comply with the Noncompetition Restrictions set forth in Article 6 herein;
(g) Developer or its owners make an unauthorized direct or indirect Transfer or attempted or purported Transfer; or
(h) Developer commits or suffers a default of: (i) a provision of this Agreement within six (6) months following a previous violation of the same provision, or (ii) its obligations under this Agreement on three (3) or more separate occasions within any 12-consecutive-month period, in either case regardless of whether Franchisor notifies Developer of the defaults or the defaults are subsequently cured.
(2) Termination with Cure Opportunity.
Franchisor may terminate this Agreement and all rights granted hereunder, effective immediately on delivery of written notice, if:
(a) Developer fails to obtain Franchisor's prior written approval or consent any time such approval or consent is required by this Agreement, fails to comply with any provision of this Agreement in respect of which Franchisor is not authorized, under Section 8.A(1) above, to terminate immediately, or fails to act in good faith in carrying out the terms of this Agreement and, in any case, does not correct such failure within 30 days after delivery of Franchisor's written notice of such failure; or
(b) Developer or its affiliates fail to pay when due any amount owing to Franchisor or its affiliates under this Agreement or any other agreement and does not correct such failure within 10 days after delivery of Franchisor's written notice.
B. Cross-Default.
If there are now, or hereafter shall be, any other agreements in effect between Developer or any of its affiliates and Franchisor or any of its affiliates (including, without limitation, any Franchise Agreement), a default by Developer or any of its affiliates and/or owners under the terms and conditions of this Agreement or any other such agreement, shall at the option of Franchisor, constitute a default under this Agreement and all such other agreements.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, several actions or failures can lead to a default under the Franchise Agreement, potentially resulting in termination. These include failing to comply with noncompetition restrictions outlined in Article 6, engaging in unauthorized direct or indirect transfers of the franchise, or defaulting on any provision of the agreement within six months of a previous violation of the same provision. Additionally, defaulting on obligations under the agreement on three or more separate occasions within any 12-month period, regardless of whether Bft provides notice or the defaults are subsequently corrected, can also trigger termination.
Bft may terminate the agreement if a franchisee fails to obtain prior written approval or consent when required, fails to comply with any provision of the agreement for which immediate termination is not authorized, or fails to act in good faith in carrying out the terms of the agreement, and does not correct such failure within 30 days after receiving written notice from Bft. Furthermore, failure to pay any amount owed to Bft or its affiliates when due, without correcting the failure within 10 days after written notice, can also result in termination.
The Franchise Agreement also contains a cross-default provision. This means that if there are other agreements in effect between the franchisee (or its affiliates) and Bft (or its affiliates), a default under any of those agreements can, at Bft's option, constitute a default under the Franchise Agreement itself. This provision broadens the scope of potential defaults beyond just the Franchise Agreement, creating a significant risk for franchisees who have multiple agreements with Bft. Franchisees need to be aware of all agreements they have with Bft and ensure compliance with all of them to avoid triggering a cross-default.