What happens if the Buff City Soap franchisee has not substantially complied with the Franchise Agreement?
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. | | i. | Your obligations on termination/non renewal | 13 | Obligations include ceasing development of BCS Makeries; payment of all amounts owed to us (including without limitation a lump sum payment of liquidated damages, described in Item 6); discontinuing the use of all Marks and ceasing the use of the System and our Confidential information and returning copies of the Manuals and all other proprietary or confidential materials that we loaned to you (except with respect to those BCS Makeries operated in accordance with a continuing | | | Provision | Section | Summary | | | | in | | | | | Development | | | | | Agreement | | |----|--------------------------------------------------------------------|-------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | Franchise Agreement with us); and compliance with all | | | | | post-termination covenants and obligations, including | | | | | confidentiality, competition and indemnification. | | j. | Assignment | 11(a) | No restriction on our right to assign. | | | of | | | | | contract by us | | | | k.
Source: Item 16 — Restrictions on What the Franchisee May Sell (FDD pages 49–59)
What This Means (2025 FDD)
According to the 2025 Buff City Soap Franchise Disclosure Document, if a franchisee fails to comply with their obligations under the Development Agreement, Buff City Soap has grounds to terminate the agreement. This can occur if a Franchise Agreement between Buff City Soap and the franchisee or their affiliate is terminated.
Buff City Soap defines curable defaults as those that can be rectified within a specific timeframe. These include a 30-day period to correct failures in adhering to the Development Schedule during any Development Period, a 5-day window to resolve payment failures owed to Buff City Soap, and a 30-day period to address non-compliance with any other significant provision of the Development Agreement, excluding the non-curable defaults.
Non-curable defaults, unless prohibited by state law, include situations such as bankruptcy or insolvency, material misrepresentation or omission that negatively affects Buff City Soap, felony convictions or unethical conduct by the franchisee or their affiliates that may adversely affect the brand, unauthorized transfers or disclosures 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.
Upon termination, the franchisee must cease development of Buff City Soap Makeries, pay all outstanding amounts (potentially including liquidated damages), discontinue using all Marks and the System, return all confidential materials, and comply with post-termination obligations such as those related to confidentiality, competition, and indemnification.