factual

What constitutes a default under the Franchise Agreement for the Big O Tires store?

Big_O_Tires Franchise · 2025 FDD

Answer from 2025 FDD Document

. Without in any way limiting the generality of the meaning of the term "good cause," the following occurrences shall constitute sufficient basis for Big O to terminate the Agreement:

  • (a) If Franchisee fails to pay any financial obligation pursuant to this Agreement including, but not limited to, payments to Big O or any other supplier for Products and Services, and fails to cure such failure to pay within five (5) days after Big O gives Franchisee a written notice of default;
  • (b) If Franchisee fails to perform or breaches any covenant, obligation, term, condition, warranty, or certification herein and fails to cure such non-compliance within thirty (30) days after Big O gives Franchisee written notice of default;
  • (c) If Franchisee fails to open the Store and commence business within eighteen (18) months of the Effective Date of this Agreement, or if Franchisee fails to commence business on such other Commencement Date as the parties hereto may have agreed. Notwithstanding the foregoing, Big O will agree to extend the time period to commence business so long as the Franchisee can demonstrate to Big O's reasonable satisfaction that the need to extend the time period is a result of factors beyond the Franchisee's reasonable control;
  • (d) If Franchisee makes, or has made, any materially false statement or report to Big O in connection with this Agreement or the application therefor;
  • (e) If Franchisee operates the Franchised Business or uses the Licensed Marks in a manner contrary to or inconsistent with this Agreement or Big O's policies, standards or specifications as stated in the Manual or elsewhere, and Franchisee fails to cure such deficiency within thirty (30) days after Big O gives a written notice of default;
  • (f) If Franchisee, an Owner, guarantor, or transferee violates any transfer or assignment provision contained in Section 18 of this Agreement;
  • (g) If Franchisee receives from Big O more than three (3) valid notices of default of this Agreement in the same twelve (12) month period, regardless of whether previous defaults have been cured;
  • (h) If Franchisee fails to operate or keep the Franchised Business open for more than five (5) consecutive business days other than with Big O's express written approval or due to an event beyond the Franchisee's reasonable control (e.g.: damage or destruction, flooding, civil disturbance), or if Franchisee ceases to operate all or any part of the Franchised Business conducted under this Agreement or if Franchisee loses possession of the Store or Premises due to a lease termination or otherwise, or defaults under any loan, lending agreement, mortgage, deed of trust or lease with any party covering the Premises, and such party treats such act or omission as a default, and Franchisee fails to cure such default to the satisfaction of such party within any applicable cure period granted Franchisee by such party and such default with a third party has or would likely have an adverse impact to the Franchisee or the Big O System generally;

Source: Item 23 — RECEIPTS (FDD pages 102–535)

What This Means (2025 FDD)

According to the 2025 Big O Tires Franchise Disclosure Document, several occurrences can lead to the termination of the Franchise Agreement. These include failing to meet financial obligations, such as payments to Big O Tires or suppliers, without rectifying the issue within five days of written notice. A franchisee also defaults if they breach any term of the agreement and fail to correct it within 30 days after receiving written notice.

Other conditions that constitute a default include failing to open the store within 18 months of the agreement's effective date, or providing false statements to Big O Tires. Operating the franchised business in a way that contradicts the agreement or Big O Tires' standards, and violating transfer or assignment provisions, also constitute default. Receiving more than three default notices within a 12-month period, even if the previous defaults were cured, is another cause for termination.

Additional causes for termination involve customer complaints, failure to comply with an audit request, not securing premises approval within 12 months, violating non-compete covenants, or initiating unapproved legal actions against Big O Tires. These stipulations highlight the importance of adhering to the Franchise Agreement and maintaining operational standards to avoid potential termination of the franchise.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.