Under what circumstances can Buff City Soap terminate the Development Agreement with 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, the company can terminate the Development Agreement with cause 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. The document outlines both curable and non-curable defaults that can lead to termination.
Curable defaults include a 30-day period to correct failures in meeting the Development Schedule during any Development Period, a 5-day period to cure any failure to make payments owed to Buff City Soap, and a 30-day period to address failure to comply with any other material provision of the Development Agreement (excluding the non-curable defaults). This means a franchisee has a limited time to rectify certain breaches of the agreement before Buff City Soap can terminate the agreement.
Non-curable defaults, which allow for immediate termination (except as prohibited under state law), include bankruptcy or insolvency, material misrepresentation or omission by the franchisee or their principals or affiliates that negatively affect Buff City Soap, a felony conviction or unethical conduct that may adversely affect the Brand, unauthorized transfer 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 are serious breaches that Buff City Soap considers sufficient grounds for immediate termination of the Development Agreement.
Prospective Buff City Soap franchisees should carefully review Section 12 of the Development Agreement, as referenced in Item 16, to fully understand their obligations and the specific actions that could lead to termination. Understanding these terms is crucial for maintaining a good relationship with Buff City Soap and ensuring the longevity of their franchise agreement.