What constitutes a material event of default under the Card My Yard Franchise Agreement?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
m or allegation that Franchisor or any affiliate is the employer, co-employer, or joint employer of Franchisee, its owners, or any workers in the Card My Yard business.
XVIII. TERMINATION
- A. Automatic Termination. You will be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to you, if you become insolvent or make a general assignment for the benefit of creditors; or if you file a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof, or admit in writing your inability to pay your debts when due; or if you are adjudicated as bankrupt or insolvent in proceedings filed against you under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state; or if a bill in equity or other proceeding for the appointment of a receiver or other custodian for your business or assets is filed and consented to by you; or if a receiver or other custodian (permanent or temporary) of your assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law are instituted by or against you; or if a final judgment against you remains unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond is filed); or if you are dissolved; or if execution is levied against your business or property; or if judicial, non-judicial or administrative proceedings to foreclose any lien or mortgage against the Card My Yard business premises or equipment is instituted against you and not dismissed within thirty (30) days; or if the real or personal property of your Card My Yard business shall be sold after levy thereupon by any sheriff, marshal or constable or is otherwise sold by means of a foreclosure sale or a public or private auction or sale conducted in accordance with applicable law.
- B. Termination on Notice; No Cure. You will be deemed to be in material default and we may, at our option, terminate this Agreement and all rights granted hereunder, without affording you any opportunity to cure the default, effective immediately upon notice to you, upon the occurrence of any of the following events:
- (1) If you operate the Card My Yard business or sell any products or services authorized by us at any location other than the Franchise Location without our prior written consent;
- (2) If you fail to construct the Card My Yard business in accordance with Article III;
- (3) If you fail to open the Card My Yard business for business within the period specified in Section III.E.;
- (4) If you at any time cease to operate or otherwise abandon the Card My Yard business, or lose the right to occupy the Franchise Location (excluding a change of your personal residence to another location within your Protected Territory if your personal residence is your Franchise Location), or otherwise forfeit the right to do or transact business in the jurisdiction where the Card My Yard business is located; provided, that this provision shall not apply upon the occurrence of an event of Force Majeure, if you apply within thirty (30) days after such event for our approval to relocate or reconstruct the Card My Yard business and you diligently pursue such reconstruction or relocation. Our approval will not be unreasonably withheld but may be conditioned upon the payment of an agreed minimum fee to us during the period in which the Card My Yard business is not in operation;
- (5) If a threat or danger to public health or safety results from the construction or operation
of the Card My Yard business;
- (6) If you or any of your Owners is convicted of, or has entered a plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude, or any other crime, offense or inappropriate action that we believe is reasonably likely to have an adverse effect on the System, the Marks, the goodwill associated therewith, or our interests therein;
- (7) If you or any of your Owners transfer or attempt to transfer any rights or obligations under this Agreement or any interest in you or the Card My Yard business contrary to the terms of this Agreement, or if a transfer upon death or permanent disability is not made in accordance with Section XV.E.;
- (8) If, contrary to the terms of Section XI.B., you or any of your Owners disclose or divulge any Confidential Information;
- (9) If you knowingly maintain false books or records, or submit any false reports to us;
- (10) If you breach in any material respect any of the covenants, or have falsely made any of the representations or warranties, set forth in Article VII., or if you make any material misstatement or omission in an application for this franchise or in any other information provided to us;
- (11) If you fail to comply with our quality assurance program (including any applicable cure periods provided under such program);
- (12) If you or any of your Owners repeatedly commit an event of default under this Agreement, whether or not such defaults are of the same or different nature and whether or not such defaults have been cured by you after notice by us;
- (13) If your assets, property or interests are 'blocked' or otherwise restricted under any law, ordinance or regulation relating to terrorist activities or if you are otherwise in violation of any such law, ordinance or regulation; or
- (14) If you or any of your Affiliates are in default of any other franchise agreement or other agreements with us and fail to cure such default within the applicable cure period, if any.
- C. Termination on Notice; Opportunity to Cure. Except as provided in Sections XVIII.A. and XVIII.B. of this Agreement, upon any default which is capable of being cured, we may terminate this Agreement by giving you written notice of termination stating the nature of the default and the time period within which the default must be cured.
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, several actions or failures can lead to a material default under the Franchise Agreement.
One category involves financial instability, such as becoming insolvent, making an assignment for the benefit of creditors, filing for bankruptcy, or admitting an inability to pay debts. Similarly, having a receiver appointed for the business, facing proceedings for composition with creditors, or having an unsatisfied final judgment for 30 days also constitute default. Other actions include dissolution, execution levied against the business, or foreclosure proceedings not dismissed within 30 days.
Operational defaults include operating the Card My Yard business outside the approved Franchise Location without written consent, failing to construct the business according to specifications, not opening the business within the specified timeframe, ceasing operations, or losing the right to occupy the Franchise Location. Other causes for default include a threat to public health or safety from the business's operation, a felony conviction of the franchisee or their owners, unauthorized transfer of rights under the agreement, disclosure of confidential information, or maintaining false records.
Additionally, failure to comply with any requirement of the Franchise Agreement or failure to carry out its terms in good faith, if not cured within 30 days of notice, also constitutes a material default. The Franchise Agreement also states that failure to promptly pay amounts owed to Card My Yard, its affiliates, and other suppliers, lenders, landlords, and other third parties (except for payments disputed in good faith) is a material default. Furthermore, failure to comply with the continuing obligations, representations, warranties, and covenants also constitutes a material event of default under the agreement.