What happens to a Camp Margaritaville subcontractor's contract if the Franchise Agreement is terminated?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
7. Term and Termination.
7.1 Agreement. This Agreement shall commence on the Effective Date and shall remain in effect for a period of one year, and shall automatically renew for subsequent periods of one year each, unless Margaritaville gives Company written notice of termination at least (30) days prior to expiration of the then-current term.
7.2 Statement of Work. Each Statement of Work will remain in effect until the Services thereunder are completed or the Statement of Work is terminated earlier as provided therein or herein.
7.3 Termination of Marketing Provider Agreement. In the event that the Marketing Provider Agreement terminates for any reason, Margaritaville shall have the option, in its sole discretion, to terminate this Agreement upon the lesser of: (a) 30 days prior written notice; or (b) the termination period provided under the Marketing Provider Agreement.
7.4 Termination by Company. The Company may terminate this Agreement upon 30 days prior written notice to Margaritaville. Company agrees to honor and pay any commissions owed on eligible business contracted through this platform.
7.5 Termination of Branding Agreement. Termination of this Agreement shall be automatically effective upon termination of the Branding Agreement.
7.6 Breach. In the event a party has failed to perform any obligation required to be performed under this Agreement or a Statement of Work and such failure is not corrected within thirty (30) days from receipt of written notice (the "Cure Period") advising of such failure from the other party, such other party may terminate the Statement of Work(s) to which such failure applies. The parties agree that the Cure Period may be modified as provided in a Statement of Work.
7.7 Nonpayment by Company. Margaritaville may terminate this Agreement before the expiration date of the Term on written notice if Company fails to pay any amount when due hereunder and such failure continues for 30 days after Company's receipt of written notice of nonpayment.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
The 2025 Camp Margaritaville Franchise Disclosure Document does not explicitly address what happens to a subcontractor's contract if the Franchise Agreement is terminated. The document does outline conditions regarding termination of the agreement in general.
Item 7.3 states that "In the event that the Marketing Provider Agreement terminates for any reason, Margaritaville shall have the option, in its sole discretion, to terminate this Agreement upon the lesser of: (a) 30 days prior written notice; or (b) the termination period provided under the Marketing Provider Agreement."
Prospective franchisees should seek clarification from the franchisor regarding the status of subcontractor agreements upon termination of the Franchise Agreement to fully understand their obligations and potential liabilities. It would be prudent to include specific clauses addressing this scenario in any subcontractor agreements to protect the franchisee's interests.