What actions can Care Plus Medical Ucc take if a franchisee is in default of the agreement?
Care_Plus_Medical_Ucc Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall reimburse Care Plus Medical UCC for its costs and expenses (including the allocation of any internal costs) for such action, plus 10% as an administrative fee.
- 11.4 Right to Discontinue Supplies Upon Default. While Franchisee is in default or breach of this Agreement, Care Plus Medical UCC may (i) require that Franchisee pay cash on delivery for products or services supplied by Care Plus Medical UCC, (ii) stop selling or providing any products and services to Franchisee, and/or (iii) request any third-party vendors to not sell or provide products or services to Franchisee.
No such action by Care Plus Medical UCC shall be a breach or constructive termination of this Agreement, change in competitive circumstances or similarly characterized, and Franchisee shall not be relieved of any obligations under this Agreement because of any such action.
Such rights of Care Plus Medical UCC are in addition to any other right or remedy available to Care Plus Medical UCC.
14.2 Termination by Care Plus Medical UCC.
(a) Subject to 10-Day Cure Period. Care Plus Medical UCC may terminate this Agreement if Franchisee does not make any payment to Care Plus Medical UCC when due, or if Franchisee does not have sufficient funds in its account when Care Plus Medical UCC attempts an
electronic funds withdrawal, and Franchisee fails to cure such non-payment within 10 days after Care Plus Medical UCC gives notice to Franchisee of such breach.
- (b) Subject to 30-Day Cure Period.
If Franchisee breaches this Agreement in any manner not described in subsection (a) or (c), and Franchisee fails to cure such breach to Care Plus Medical UCC's satisfaction within 30 days after Care Plus Medical UCC gives notice to Franchisee of such breach, then Care Plus Medical UCC may terminate this Agreement.
- (c) Without Cure Period.
Care Plus Medical UCC may terminate this Agreement by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
(i) Franchisee misrepresented or omitted material facts when applying to be a franchisee, or breaches any representation in this Agreement;
(ii) Franchisee knowingly submits any false report or knowingly provides any other false information to Care Plus Medical UCC;
Franchisee fails to cure such danger within 48 hours after becoming aware of the danger (due to notice from Care Plus Medical UCC or otherwise);
(xi) Franchisee has received two or more notices of default and Franchisee commits another breach of this Agreement, all in the same 12-month period;
14.5 Liquidated Damages. If Care Plus Medical UCC terminates this Agreement based upon Franchisee's default (or if Franchisee purports to terminate this Agreement except as permitted under Section 14.1), then within 10 days thereafter Franchisee shall pay to Care Plus Medical UCC a lump sum (as liquidated damages and not as a penalty) calculated as follows: (x) the average Royalty Fees and Marketing Fund Contributions that Franchisee owed to Care Plus Medical UCC under this Agreement for the 52-week period preceding the date on which Franchisee ceased operating the Business; multiplied by (y) the lesser of (1) 104 or (2) the number of weeks remaining in the then-current term of this Agreement.
If Franchisee had not operated the Business for at least 52 weeks, then (x) will equal the average Royalty Fees and Marketing Fund Contributions that Franchisee owed to Care Plus Medical UCC during the period that Franchisee operated the Business.
The "average Royalty Fees and Marketing Fund Contributions that Franchisee owed to Care Plus Medical UCC" shall not be discounted or adjusted due to any deferred or reduced Royalty Fees and Marketing Fund Contributions set forth in an addendum to this Agreement, unless this Section 14.5 is specifically amended in such addendum.
Franchisee acknowledges that a precise calculation of the full extent of Care Plus Medical UCC's damages under these circumstances is difficult to determine and the method of calculation of such damages as set forth in this Section is reasonable.
Franchisee's payment to Care Plus Medical UCC under this Section will be in lieu of any direct monetary damages that Care Plus Medical UCC may incur as a result of Care Plus Medical UCC's loss of Royalty Fees and Marketing Fund Contributions that would have been owed to Care Plus Medical UCC after the date of termination; however, such payment shall be in addition to all damages and other amounts arising under Section 14.3 and Section 14.4, Care Plus Medical UCC's right to injunctive relief for enforcement of Article 13, and any attorneys' fees and other costs and expenses to which Care Plus Medical UCC is entitled under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 41)
What This Means (2024 FDD)
According to the 2024 Care Plus Medical Ucc Franchise Disclosure Document, if a franchisee defaults on the agreement, Care Plus Medical Ucc has several options. First, Care Plus Medical Ucc can require the franchisee to pay cash on delivery for products or services, stop selling or providing any products and services to the franchisee, and request that third-party vendors do the same. Care Plus Medical Ucc states that these actions do not constitute a breach or constructive termination of the agreement, and the franchisee remains obligated under the agreement. The franchisee is also responsible for reimbursing Care Plus Medical Ucc for costs and expenses related to the default action, plus a 10% administrative fee.
Care Plus Medical Ucc can terminate the agreement with varying cure periods depending on the nature of the default. If a franchisee fails to make payments when due or lacks sufficient funds for electronic withdrawals, Care Plus Medical Ucc can terminate the agreement if the franchisee does not cure the non-payment within 10 days of notice. For other breaches not described above or in subsection (c), a 30-day cure period is provided. However, Care Plus Medical Ucc can terminate the agreement without a cure period under specific circumstances, including misrepresentation during the application process, submission of false reports, endangering patients, repeated defaults within a 12-month period, termination of another agreement with the franchisee, a felony charge or conviction of the franchisee or any owner, or actions that could unfavorably affect the Care Plus Medical brand.
Upon termination, the franchisee must pay all outstanding amounts, return all copies of the Manual and Confidential Information, and cease using any materials related to the business. If Care Plus Medical Ucc terminates the agreement due to the franchisee's default, the franchisee must pay liquidated damages. These damages are calculated based on the average Royalty Fees and Marketing Fund Contributions owed during the 52-week period preceding the cessation of operations, multiplied by the lesser of 104 or the number of weeks remaining in the agreement term. This payment is in place of direct monetary damages for lost Royalty Fees and Marketing Fund Contributions but is in addition to other damages and amounts, including attorney's fees and injunctive relief.