What are the consequences if a Casiola franchisee fails to comply with the system standards?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
isclosed in Exhibit I to this Disclosure | | | | Document. |
| g. | "Cause" defined-curable defaults | 16.A.(3), 16.A.(4) | You have 10 days to cure a default where you fail to pay any fees and/or obligations due to us and/or to an affiliate of ours or if you fail to pay a supplier without, as determined by us, a legal justification, provided that the foregoing defaults were not intentionally and knowingly in violation of the Franchise Agreement. You will have 30 days to cure a default where you fail to: timely lease a location that we approve for your Casiola Business; timely develop and open your Casiola Business; operate your Casiola Business in accordance with the specifications, standards, and requirements set forth in our Manuals; develop or operate your Casiola Business in compliance with all federal, state, and local laws, rules, and regulations, unless, such violation poses a threat to public health or safety; maintain insurance coverage that we require; comply with our standards, systems or specifications as we may designate or as otherwise designated in the operations manual; fail to operate your Casiola Business in conformity with our System or otherwise violate the Franchise Agreement, except as to events of default that are not curable. |
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| h. | "Cause" defined-non-curable defaults | 16.A.(1), 16.A.(2) | The following are defaults that cannot be cured: three or more instances where you commit a curable default, whether or not you timely cured such default in each instance; you intentionally and knowingly refuse to comply with the terms of the Franchise Agreement, and/or the standards specifications, and/or requirements set forth in the operations manual and/or as communicated to you by us from time to time; you intentionally, knowingly, or negligently operate the Franchised Business in violation of applicable laws, rules, and regulations and, in doing so, create a foreseeable, imminent, and/or immediate threat to the health and safety of others; you abandon the Franchised Business; you or your Owners intentionally made a material statement or omission in questionnaires submitted to us; the data, information, and/or records that you record and/or submit to us are intentionally misleading or false; you transfer or attempt to transfer the Franchised Business or the ownership interests in your franchise company without our approval; you disclose or permit the disclosure of information contained in the operations manual and/or of confidential information; you or your Owners engage in intentionally dishonest or unethical conduct that impacts our System; you and/or your Owners breach and, if such breach is capable of a cure, fail to timely cure another agreement with us, including the Owner Agreement and Guaranty; you and your Owners and managers fail to complete, to our satisfaction, our initial and on-going training programs; you fail to notify us of the misuse of confidential information and you fail to protect same; you misappropriate or misuse the Licensed Marks; you are deemed insolvent, make an assignment for the benefit of creditors, admit in writing your inability to pay debts; are adjudicated bankrupt, file a voluntary bankruptcy petition or have one filed against you, and/or you acquiesce to the appointment of a trustee or receiver, or a court orders one; execution is levied against the Franchised Business; a final judgment is entered against the Franchised Business and is not satisfied within 30 days; you are dissolved; a lawsuit or action is commenced against the Franchised Business to foreclose on a lien on equipment of the Franchised Business and |
| i. | Franchisee's obligations on termination/non-renewal | 6, 17 | You must: pay all sums that you owe to us under the Franchise Agreement and all other agreements with us; cease owning and operating the Franchised Business; cease representing yourself as a franchisee of ours; permanently cease using and/or accessing the System, the Licensed Marks, our confidential information, the Manuals, the Bookings and Management System, the Bookings and Management System Data, and the System Supplies; return the Manuals and all confidential information to us in the original form provided to you and document the destruction of all electronic files related to same; completely de-identify the location and/or facility associated with the Franchised Business; as requested by us, transfer to us all data, telephone listings, digital media, accounts, web listings and websites associated with the Franchised Business; and abide by the post-termination non competition covenants and restrictions. | |----|--------------------------------------------------------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | j. | Assignment of the contract by franchisor | 14.A. | No restriction on our right to assign. | | k. | "Transfer" by franchisee definition | 14.B. | A transfer means and includes, whether voluntary or involuntary, conditional or unconditional, direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub-franchise; (b) the grant of a mortgage, charge, lien or security interest, including, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; and (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee. | | l. | Franchisor's approval of transfer by franchisee | 14.B. | Transfers require our prior written consent, which may be granted or withheld in our discretion. | | m. | Conditions for franchisor's approval of transfer | 14.C. | For approval of your transfer, you must provide us with 30 days prior written notice of the proposed transfer; you and your Owners must not have defaulted in your obligations under the Franchise Agreement and all other agreements with us; you and your Owners must be in compliance with your obligations under the Franchise Agreement and all other agreements with us; the transferee must agree to be bound by all of the terms and provisions of the Franchise Agreement; the transferee's owners must personally guarantee all of the terms and provisions of the Franchise Agreement; you and your Owners must sign a general release in favor of us; the transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferee's continued use and occupancy of such location |
| n. | Franchisor's right of first refusal to acquire franchisee's business | 14.F. | We have the right to match any offer to purchase your Casiola Business or the Corporate Entity operating your Casiola Business.
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD page 35)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, a franchisee's failure to comply with system standards can lead to both curable and non-curable defaults, each with distinct consequences. A curable default includes failing to operate the Casiola Business in accordance with the specifications, standards, and requirements set forth in the manuals or failing to comply with Casiola's standards, systems, or specifications. In these instances, Casiola provides the franchisee with 30 days to correct the issue. However, this cure period is not applicable if the violation poses a threat to public health or safety.
Non-curable defaults, which result in immediate termination of the franchise agreement, include intentionally and knowingly refusing to comply with the terms of the Franchise Agreement, the standards, specifications, or requirements in the operations manual, or as communicated by Casiola. Additionally, if a franchisee commits three or more curable defaults, regardless of whether they were timely cured, it is considered a non-curable default.
Casiola also has the option to provide supplemental on-site training if a franchisee is not meeting system performance standards. The franchisee is required to pay a fee for this training, which is currently $750 per on-site trainer per day, plus travel expenses, meals, and accommodation expenses incurred by Casiola. Furthermore, upon termination of the Franchise Agreement, the franchisee has several continuing obligations, including modifying the former Casiola Business to prevent confusion, removing all signs and emblems associated with the system, and taking actions necessary to cancel fictitious names related to the licensed marks. The franchisee must also provide Casiola with written proof of compliance with these obligations within 30 days of termination.