Under what circumstances can Bombs Away terminate a franchise agreement before its expiration?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
The Franchise Agreement provides for termination upon bankruptcy of the franchisee. This provision may not be enforceable under federal bankruptcy law.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away FDD, specific conditions for termination of a franchise agreement prior to its expiration are addressed with respect to Michigan franchisees. In Michigan, a provision that allows Bombs Away to terminate a franchise before the end of its term is only enforceable if there is 'good cause.'
'Good cause' includes the franchisee's failure to comply with any lawful provision of the franchise agreement. However, Bombs Away must provide the franchisee with written notice of the failure and a reasonable opportunity to correct it. According to the FDD, the franchisee needs to be given no more than 30 days to fix the failure.
Additionally, the FDD states that a Franchise Agreement provides for termination upon bankruptcy of the franchisee, but this provision may not be enforceable under federal bankruptcy law.