What constitutes a 'default' under the Buff City Soap Development Agreement that could lead to termination?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
| d. | Termination by you | N/A | You |
|---|---|---|---|
| may terminate under any grounds permitted by | |||
| applicable | |||
| law. | |||
| e. | Termination | N/A | Not Applicable. |
| by | |||
| us | |||
| Without cause | |||
| f. | Termination by us with cause | 12 | We may terminate your Development Agreement only if you default or fail to comply with your obligations under the Development Agreement or if a Franchise Agreement between us and you or your affiliate is terminated. |
| g. | "Cause" defined - curable defaults | 12(a) | Curable defaults include 30 days to cure failure to comply with the Development Schedule during any Development Period; five days to cure any failure to make payments owed to us; and 30 days for failure to comply with any other material provision of the Development Agreement (other than the defaults listed in Paragraph 17.h. below). |
| h. | "Cause" defined - non curable defaults | 12(a), 12(b), 12(c) and 12(d) | Except as prohibited under state law, non-curable defaults include bankruptcy or insolvency (our right to terminate may not be enforceable under bankruptcy law); material misrepresentation or omission by you or your principals or affiliates that negatively affect us; you or your principals or affiliates being held liable or convicted of a felony, indictable offense or other unlawful act or you or your principals or affiliates engaging in any dishonest or unethical conduct or act that may materially or adversely affect the Brand, the System or goodwill associated with the Marks; any unauthorized transfer pursuant to Section 11 by you or any of your principals or affiliates; any unauthorized disclosure or use of our Confidential Information, the Manuals, the Marks; or our Trade Secrets; any failure by you, your principals or your Designated Principal to comply with the representations, warranties and covenants in the Development Agreement; termination by us of any Franchise Agreement with you or any of your affiliates; failure to pay any taxes applicable to the operation of your business under the Development Agreement, absent a good faith dispute; three or more defaults within 12-month period, regardless of whether corrected after notice of such failure; and failure to comply with applicable law. |
Source: Item 16 — Restrictions on What the Franchisee May Sell (FDD pages 49–59)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, the Development Agreement can be terminated if the franchisee defaults or fails to comply with their obligations. These defaults are categorized as either curable or non-curable.
Curable defaults, as outlined in Section 12(a) of the Development Agreement, include a 30-day period to correct failures in adhering to the Development Schedule during any Development Period. There is also a five-day cure period for any failure to make payments owed to Buff City Soap. Additionally, franchisees have 30 days to rectify any failure to comply with other material provisions of the Development Agreement, except for the non-curable defaults listed in Paragraph 17.h.
Non-curable defaults, detailed in Sections 12(a), 12(b), 12(c), and 12(d), encompass a range of serious issues. These include bankruptcy or insolvency, material misrepresentations or omissions that negatively affect Buff City Soap, and criminal behavior or unethical conduct by the franchisee or their affiliates that could harm the brand's reputation. Other non-curable defaults include unauthorized transfers of the agreement, unauthorized disclosure of confidential information, failure to comply with representations and warranties in the Development Agreement, termination of any Franchise Agreement with the franchisee or their affiliates, failure to pay applicable taxes, three or more defaults within a 12-month period, and failure to comply with applicable law. These stipulations highlight the importance of understanding and adhering to all aspects of the Development Agreement to avoid potential termination.