Can Bft terminate the agreement if an affiliate of the developer defaults on payments?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
(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, Bft has the right to terminate the agreement if a developer or its affiliates fail to pay amounts owed to Bft or its affiliates. Specifically, Bft can terminate the agreement if the developer or its affiliates fail to pay any amount due under the agreement or any other agreement with Bft or its affiliates, and the failure is not corrected within 10 days after written notice from Bft. This is considered a termination with a cure opportunity.
Furthermore, the FDD includes a cross-default provision. This means that if there are any other agreements in effect between the developer (or its affiliates) and Bft (or its affiliates), a default by the developer or its affiliates under any of those agreements can be considered a default under the Multi-Unit Agreement. This gives Bft the option to terminate the Multi-Unit Agreement if the developer or its affiliates default on any other agreement with Bft.
This clause is significant for potential Bft developers because it broadens the circumstances under which Bft can terminate the agreement. It's not just about defaults directly related to the Multi-Unit Agreement itself, but also any other financial obligations the developer or its affiliates have with Bft. Developers should ensure all payments to Bft and its affiliates are made on time to avoid potential termination of the agreement.
In the event of termination, the developer has certain obligations, though the specifics of these obligations are not detailed in the provided excerpts. It is important for prospective developers to understand the full scope of these obligations upon termination or expiration of the agreement.