What constitutes 'good cause' for Chem Dry to terminate a franchise agreement?
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 Chem Dry's 2024 Franchise Disclosure Document, the definition of 'good cause' for termination is tied to Minnesota law. Specifically, Minnesota statute §80C14 stipulates that 'good cause' for terminating a franchise involves the franchisee's failure to substantially comply with reasonable requirements set by the franchise agreement.
Examples of such failure include, but are not limited to, the franchisee's bankruptcy or insolvency, assignment of assets for the benefit of creditors, voluntary abandonment of the franchise business, or conviction of a law violation related to the franchise business.
Chem Dry must provide the franchisee with written notice of termination at least 90 days in advance, allowing 60 days to correct the issues. However, the notice is effective immediately if the franchisee voluntarily abandons the relationship, is convicted of an offense directly related to the business, or fails to cure a default that materially impairs the goodwill associated with Chem Dry's trademarks after a 24-hour notice.