Is Chem Dry allowed to terminate or cancel a franchise without good cause?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
Minnesota statute §80C14 provides: It shall be deemed unfair and inequitable for any person to:
- (A) Terminate or cancel a franchise without first giving written notice setting forth all the reasons for the termination or cancellation to the Franchisee at least 90 days in advance of termination or cancellation, and the recipient of a notice fails to correct the reasons stated for cancellation or termination within 60 days within receipt of the notice, except that the notice shall be effective immediately upon receipt where the alleged grounds are:
- (i) Voluntary abandonment of the franchise relationship by the Franchisee;
- (ii) The conviction of the Franchisee of an offense directly related to the business conducted pursuant to the franchise; or
- (iii)Failure to cure a default under the Franchise Agreement which materially impairs the goodwill associated with the Franchisor's trade name, Trademark, service mark, logotype or other commercial symbol after the Franchisee has received written notice to cure of at least 24 hours in advance thereof;
- (B) Terminate or cancel a franchise except for good cause. "Good cause" shall be failure by the Franchisee substantially to comply with reasonable requirements imposed upon him by the franchise including, but not limited to:
- (i) The bankruptcy or insolvency of the Franchisee;
- (ii) Assignment for the benefit of creditors or similar disposition of the assets of the franchise business;
- (iii)Voluntary abandonment of the franchise business;
- (iv)Conviction or a plea of guilty or no contest to a charge of violating any
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to the 2024 Chem Dry Franchise Disclosure Document, Minnesota Statute §80C14 addresses franchise termination and cancellation. It stipulates that it is considered unfair and inequitable for any person to terminate or cancel a franchise without providing written notice to the franchisee, which includes all the reasons for termination or cancellation, at least 90 days in advance. The franchisee then has 60 days to correct the stated reasons.
However, the notice can be effective immediately upon receipt if the grounds for termination are: voluntary abandonment of the franchise, conviction of an offense directly related to the franchise business, or failure to cure a default under the Franchise Agreement that materially impairs the goodwill associated with Chem Dry's trade name, trademark, service mark, logotype, or other commercial symbol after receiving at least 24 hours' notice to cure the default.
Furthermore, Chem Dry can only terminate or cancel a franchise for "good cause." Good cause is defined as the franchisee's failure to substantially comply with reasonable requirements imposed by the franchise agreement. This includes, but is not limited to, the franchisee's bankruptcy or insolvency, assignment for the benefit of creditors, voluntary abandonment of the franchise business, or conviction of violating any law relating to the franchise business.