Must Bft notify the developer of defaults before terminating for repeated violations?

According to Bft's 2025 Franchise Disclosure Document, Bft may terminate the agreement with a developer for repeated violations of the agreement, regardless of whether Bft has notified the developer of the defaults or whether the defaults were subsequently cured. Specifically, if a developer defaults on a provision of the agreement within six months of a previous violation of the same provision, or defaults on obligations under the agreement on three or more separate occasions within any 12-month period, Bft can terminate the agreement.

This means that a Bft developer could face immediate termination without prior warning or an opportunity to correct the issues if these repeated violations occur. This is a significant risk for developers, as even minor or unintentional breaches could lead to termination if they occur frequently enough.

In contrast, for other types of defaults, Bft is required to provide written notice and an opportunity to cure. For instance, if a developer fails to obtain Bft's prior written approval when required or fails to act in good faith, Bft must provide a 30-day written notice to correct the failure. Similarly, if a developer fails to pay amounts owed to Bft, a 10-day written notice is required for correction. The distinction highlights the importance Bft places on preventing repeated violations, as these are treated more severely than other types of breaches.

Prospective Bft developers should be aware of this termination clause and ensure they have systems in place to prevent repeated violations of the franchise agreement. This could include implementing strict compliance procedures, providing thorough training to staff, and regularly reviewing operations to identify and address potential issues before they escalate into repeated defaults.