Under what conditions can Big Blue Swim School terminate the Franchise Agreement with cause?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
| | | | Franchise Agreement without cause. | | | | | | f. Termination by franchisor with cause | 16 and 19.B of Franchise Agreement 5 of SaaS Agreement | We have the right to terminate your Franchise | | | | Agreement (and SaaS Agreement) only if you or | | | | your owners commit one of several violations. | | | | While termination of the Development Rights | | | | Agreement does not impact any then-effective | | | | franchise agreement, termination of a franchis | | | | agreement entitles us to terminate the | | | | Development Rights Agreement. | | Provision | Section in franchise or | Summary | | g. “Cause” defined curable defaults | 16 and 19.B of Franchise Agreement 5 of SaaS Agreement | You have 5 days to cure monetary, safety, and | |---|---|---| | | | insurance defaults; 10 days to cure rejection of | | | | Qualified Site tendered to you; 10 days to satisfy | | | | unpaid judgments of at least $25,000; 30 days to | | | | pay suppliers and to cure other defaults not listed | | | | in (h) below; 60 days to vacate attachment, | | | | seizure, or levy of School or appointment of | | | | receiver, trustee, or liquidator; and time allowed | | | | by law to cure violations of material law. | | | | | | | | In addition, we have the right to terminate the | | | | Franchise Agreement immediately upon written | | | | notice if the cost to repair the damage to the | | | | School from a fire or other casualty exceeds a | | | | certain damage threshold and you do not notify us | | | | within a reasonable time after the casualty that | | | | you either intend to repair the damage and operate | | | | the School or elect not to repair the damage and | | | | operate the School. | | | | | | | | While termination of the Development Rights | | | | Agreement does not impact any then-effective | | | | franchise agreement, termination of a franchis | | | | agreement entitles us to terminate the | | | | Development Rights Agreement. | | | | | | | | You have 10 days to cure monetary defaults and | | | | 10 days to cure other defaults under SaaS | | | | Agreement | | h. “Cause” defined non- curable defaults | 19.B of Franchise Agreement 5 of SaaS Agreement | Non-curable defaults include: material | | | | misrepresentation or omission; failure to complete | | | | initial training to our satisfaction; failure to meet | | | | development obligation by required deadline; | | | | failure to secure, at least 30 days before | | | | anticipated lease-signing date, all financing | | | | required to construct, develop, and open your | | | | School; failure to open School (with fully-trained | | | | staff) by deadline; abandonment or failure to | | | | operate for at least 3 consecutive days; | | | | unapproved transfer; felony conviction or guilty | | | | plea; serious threat or danger to public health or | | | | safety from School’s construction or operation; | | | | we reasonably determine dishonest, unethical, or | | | | immoral conduct adversely impacting our Marks; | | | | foreclosure on School’s assets; misuse of | | | | confidential information; violation of non- | | | | compete; material underreporting of Gross | | Provision | Section in franchise or | Summary | | | other agreement | | |---|---|---| | | | Revenue; failure to pay taxes due; repeated | | | | defaults; assignment for benefit of creditors or | | | | admission of inability to pay debts when due; | | | | violation of anti-terrorism laws; losing right to | | | | School premises; or causing or contributing to a | | | | data security incident or failure to comply with | | | | requirements to protect Consumer Data. | | | | | | | | Termination of the Development Rights | | | | Agreement does not impact any then-effective | | | | franchise agreement. | | | | | | | | SaaS Agreement terminates concurrently with | | | | termination of Franchise Agreement. | | i. Franchisee’s obligations on | 20 of Franchise | Obligations include paying outstanding amounts | | termination/nonrenewal | Agreement | | | | | (plus, if applicable, liquidated damages); complete | | | | de-identification; returning confidential | | | | information;
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–69)
What This Means (2025 FDD)
According to Big Blue Swim School's 2025 Franchise Disclosure Document, the company has the right to terminate the Franchise Agreement and SaaS (Software as a Service) Agreement if the franchisee or their owners commit certain violations. These violations are categorized as either curable or non-curable defaults. The termination of a Development Rights Agreement does not impact any then-effective franchise agreement, but the termination of a franchise agreement does allow Big Blue Swim School to terminate the Development Rights Agreement. The SaaS Agreement terminates concurrently with the termination of the Franchise Agreement.
Curable defaults are those that the franchisee has a specific timeframe to correct. These include 5 days to cure monetary, safety, and insurance defaults; 10 days to cure rejection of a Qualified Site tendered to you; 10 days to satisfy unpaid judgments of at least $25,000; 30 days to pay suppliers and to cure other defaults not listed as non-curable; 60 days to vacate attachment, seizure, or levy of School or appointment of receiver, trustee, or liquidator; and time allowed by law to cure violations of material law. Additionally, Big Blue Swim School can terminate the Franchise Agreement immediately with written notice if the cost to repair damage from a fire or other casualty exceeds a certain threshold, and the franchisee does not notify Big Blue Swim School within a reasonable time of their intent to repair and operate the School or elect not to repair the damage and operate the School. Franchisees also have 10 days to cure monetary defaults and 10 days to cure other defaults under the SaaS Agreement.
Non-curable defaults, which allow for immediate termination, include material misrepresentation or omission; failure to complete initial training to Big Blue Swim School's satisfaction; failure to meet development obligations by the required deadline; failure to secure all financing required to construct, develop, and open the School at least 30 days before the anticipated lease-signing date; failure to open the School with a fully-trained staff by the deadline; abandonment or failure to operate for at least 3 consecutive days; unapproved transfer; felony conviction or guilty plea; serious threat or danger to public health or safety from the School’s construction or operation; Big Blue Swim School reasonably determining dishonest, unethical, or immoral conduct adversely impacting their Marks; foreclosure on the School’s assets; misuse of confidential information; violation of non-compete agreements; material underreporting of Gross Revenue; failure to pay taxes due; repeated defaults; assignment for the benefit of creditors or admission of inability to pay debts when due; violation of anti-terrorism laws; losing the right to the School premises; or causing or contributing to a data security incident or failure to comply with requirements to protect Consumer Data.
This means a prospective Big Blue Swim School franchisee needs to be aware of all the possible actions that could lead to the termination of their agreement. It is important to maintain open communication with Big Blue Swim School, meet all deadlines, and operate the business ethically and within the bounds of the Franchise Agreement to avoid potential termination. Understanding both curable and non-curable defaults is crucial for maintaining a successful franchise relationship.