What is the 'Cross-Default' clause in the Bft Franchise Agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the Cross-Default clause outlines the implications if a franchisee or their affiliates fail to meet the obligations of any agreement with Bft or its affiliates. Specifically, if a franchisee defaults on one agreement, Bft has the option to consider that default as a default across all agreements in place with the franchisee and their affiliates. This includes, but isn't limited to, any other Franchise Agreements.
For a prospective Bft franchisee, this clause means that all agreements they or their affiliates have with Bft are interconnected. A failure to comply with the terms of one agreement (such as a franchise agreement, loan agreement, or supply agreement) can trigger a default in all other agreements. This could lead to the termination of multiple franchise agreements or other business relationships with Bft, creating significant financial and operational risks.
This type of clause is relatively common in franchising, as it protects the franchisor's interests by ensuring consistent compliance across all aspects of the business relationship. However, it places a significant responsibility on the franchisee to manage all their obligations diligently. Franchisees should carefully review all agreements with Bft and ensure they have the resources and capabilities to meet all requirements to avoid triggering the cross-default provision.