Does the acceptance of payments from a Big Apple Bagels franchisee after a breach constitute a waiver of the breach?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- i. Franchisor and Franchisee may by written instrument unilaterally waive or reduce any obligation of or restriction upon the other under this Agreement, effective upon delivery of written notice thereof to the other or such other effective date stated in the notice of waiver. Any waiver granted by Franchisor shall be without prejudice to any other rights Franchisor may have, will be subject to continuing review by Franchisor and may be revoked, in Franchisor's sole discretion, at any time and for any reason, effective upon delivery to Franchisee of ten (10) days' prior written notice. Franchisor and Franchisee shall not be deemed to have waived or impaired any right, power or option reserved by this Agreement (including, without limitation, the right to demand exact compliance with every term, condition and covenant herein or to declare any breach thereof to be a default and to terminate the Franchise prior to the expiration of its term) by virtue of any custom or practice of the parties at variance with the terms hereof; any failure, refusal or neglect of Franchisor or Franchisee to exercise any right under this Agreement or to insist upon exact compliance by the other with its obligations hereunder including, without limitation, any mandatory specification, standard or operating procedure; any waiver, forbearance, delay, failure or omission by Franchisor to exercise any right, power or option, whether of the same, similar or different nature, with respect to any other BAGELS Store; or the acceptance by Franchisor of any payments from Franchisee after any breach by Franchisee of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the acceptance of payments from a franchisee after a breach of the franchise agreement does not automatically constitute a waiver of that breach by Big Apple Bagels. This means that even if Big Apple Bagels continues to accept royalty payments or other fees from a franchisee who has violated the agreement, Big Apple Bagels still retains the right to enforce the terms of the agreement and pursue remedies for the breach.
This provision protects Big Apple Bagels' ability to address breaches of the franchise agreement without inadvertently relinquishing its rights. It allows Big Apple Bagels to continue receiving payments while it assesses the severity of the breach and determines the appropriate course of action. This is a common practice in franchising, as franchisors need to maintain consistent revenue streams while also ensuring compliance with the franchise agreement.
For a prospective Big Apple Bagels franchisee, this clause highlights the importance of adhering to all terms and conditions of the franchise agreement. Even if Big Apple Bagels accepts payments after a breach, the franchisee is still liable for the violation and may face consequences such as penalties, required corrective actions, or even termination of the franchise agreement. Franchisees should not assume that continued acceptance of payments implies forgiveness or condoning of any breach.