Does Buff City Soap have the right to terminate the Development Agreement without cause?
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, Buff City Soap does not have the right to terminate the Development Agreement without cause. The FDD outlines specific conditions under which Buff City Soap can terminate the Development Agreement, all of which involve some form of default or failure to comply with the agreement on the part of the franchisee.
Buff City Soap can only terminate the Development Agreement if the franchisee defaults or fails to comply with their obligations under the Development Agreement, or if a Franchise Agreement between Buff City Soap and the franchisee or their affiliate is terminated. This means that Buff City Soap must have a legitimate reason, or "cause," to terminate the agreement. This provides some protection to the franchisee, as Buff City Soap cannot arbitrarily terminate the agreement without justification.
The agreement specifies both curable and non-curable defaults. Curable defaults include a 30-day period to correct failures to comply with the Development Schedule during any Development Period, five days to cure any failure to make payments owed to Buff City Soap, and 30 days to correct failure to comply with any other material provision of the Development Agreement. Non-curable defaults include events such as bankruptcy or insolvency, material misrepresentation, criminal acts, unauthorized transfers, or repeated defaults. The inclusion of both curable and non-curable defaults provides a structured framework for addressing potential issues during the development phase.
This is a fairly standard practice in franchising, where franchisors typically need a justifiable reason to terminate an agreement to protect franchisees who have invested time and money into developing the business. Prospective Buff City Soap franchisees should carefully review Section 12 of the Development Agreement, as referenced in the FDD, to fully understand what constitutes a default and the circumstances under which Buff City Soap can terminate the agreement.