What constitutes an 'Event of Default' that could lead to termination of the Bumper Man franchise agreement?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
anchisor.
(e) Severability and Enforceability of Covenants. Each of the covenants contained in this Section 17 will be considered separate and independent from each other. If any covenant in this Agreement which restricts competitive activity is deemed unenforceable for any reason, but would be enforceable by reducing or substituting any part of it in accordance with Section 26(a), such covenant will be enforced to the fullest extent permissible under Applicable Law.
18. DEFAULT AND TERMINATION.
The occurrence of any of the following will adversely and substantially affect the interests of Franchisor and will be deemed an Event of Default constituting just cause for exercising any of the remedies set forth herein:
- (a) Franchisor may terminate this Agreement upon delivery to Franchisee of Notice as a result of the occurrence of any of the following Events of Default and Franchisee's failure to cure such Event of Default within the cure period described below, if any, and absent a cure period, immediately upon Franchisor's Notice to Franchisee:
- (i) Franchisee (or any of its Principals or Affiliates) has made any material misrepresentation or omission in connection with this Agreement;
- (ii) Franchisee fails to begin operating the Bumper Business as of the Commencement Date, and fails to cure such default within 30 days after Notice of such Event of Default is delivered to Franchisee;
- (iii) Franchisee abandons or fails actively to operate the Bumper Business for
five or more Business Days unless the Bumper Business has been closed for a purpose Franchisor has approved in writing or because of an Event of Force Majeure;
- (iv) Franchisee fails to submit invoices to Franchisor for processing for seven or more consecutive Business Days without Franchisor's prior approval;
- (v) Franchisee surrenders or transfers Control of the operation of the Business without Franchisor's prior written consent;
- (vi) Franchisee (or any of its Principals or Affiliates) is or has been held liable or convicted by a court of law, pleads or has pleaded no contest to, a felony, indictable offense or other unlawful act, engages in any dishonest or unethical conduct or otherwise engages in any act or conduct which Franchisor believes will materially and adversely affect the reputation of the Bumper Business, any other Bumper Man business or the goodwill associated with Marks;
- (vii) Franchisee's misuse or unauthorized use of the Marks, including without limitation Franchisee's misuse or unauthorized use of the Marks on its Social Media pages or other Internet site, or registration of a domain name incorporating the Marks;
- (viii) Franchisee (or any of its Principals or Affiliates) makes an unauthorized Transfer pursuant to Section 16;
- (ix) Franchisee (or any of its Principals or Affiliates) makes any unauthorized use or disclosure of any Confidential Information or Franchisor's trade secrets; or uses, duplicates or discloses any portion of the Manual in violation of this Agreement;
- (x) Franchisee and Franchisee's Principals or Operating Principal fails to comply with or perform its covenants, representations and warranties in this Agreement, including without limitation the representations, warranties and covenants set forth in Section 10, the representations and warranties with respect to anti-corruption, anti-boycott and anti-terrorism
laws set forth in Section 15 and the restrictive covenants against competition set forth in Section 17;
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, several events can trigger a default, potentially leading to the termination of the franchise agreement. These events are considered to adversely and substantially affect Bumper Man's interests.
Specifically, Bumper Man can terminate the agreement if a franchisee makes a material misrepresentation or omission related to the agreement. Failure to begin operating the Bumper Business by the commencement date, and not curing this within 30 days of notice, is also grounds for termination. Abandoning the business for five or more business days without approval or due to an unapproved event, failing to submit invoices for processing for seven or more consecutive business days without approval, or surrendering control of the business without written consent are also causes for termination.
Further, a franchisee's (or their principals' or affiliates') involvement in unlawful activities, such as being convicted of a felony or engaging in unethical conduct that harms Bumper Man's reputation, can lead to termination. Misuse of Bumper Man's marks, including on social media or domain names, and unauthorized transfers of the franchise also constitute default.
Additionally, Bumper Man can terminate the agreement if less than 35% of the franchisee's gross sales in each month of any consecutive two-month period comes from metal bumper repairs. Repeated defaults, defined as three failures within 12 months to submit reports, pay amounts due, or materially comply with the agreement, also result in immediate termination. Finally, insolvency events like bankruptcy, assignment for the benefit of creditors, or appointment of a receiver can automatically terminate the agreement.