What happens if a Chocolate Bash franchisee is convicted of a felony?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| h. “Cause” defined--non- | FA: § 14.2 | FA: Misrepresentation when applying to be a |
| curable defaults | ||
| MUDA: § 4 | franchisee; knowingly submitting false information; bankruptcy; lose possession of your location; violation of law; violation of confidentiality; violation of non-compete; violation of transfer restrictions; slander or libel of us; refusal to cooperate with our business inspection; cease operations for more than 5 consecutive days; three defaults in 12 months; cross-termination; conviction of a felony, or accusation of an act that is reasonably likely to materially and unfavorably affect our brand; any other breach of franchise agreement which by its nature cannot be cured. MUDA: failure to meet development schedule; violation of franchise agreement or other agreement which gives us the right to terminate it. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 30–34)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a franchisee's conviction of a felony constitutes a non-curable default under the Franchise Agreement. This is explicitly stated as a condition that allows Chocolate Bash to terminate the franchise agreement. Additionally, even an accusation of an act that is reasonably likely to materially and unfavorably affect their brand can also lead to termination.
This provision means that if a Chocolate Bash franchisee is convicted of a felony, Chocolate Bash has the right to terminate the franchise agreement immediately. The franchisee would not have an opportunity to correct or 'cure' the situation. This is a significant risk for franchisees, as any felony conviction, regardless of its connection to the business, could result in the loss of their franchise.
It is important for prospective franchisees to understand that this clause is not limited to actions directly related to the operation of the Chocolate Bash business. Any felony conviction can trigger the termination clause. Franchisees should carefully consider this provision and seek legal advice to fully understand the implications. This type of clause is relatively standard in franchise agreements, as franchisors need to protect their brand and reputation. However, the breadth of the clause, including even accusations, makes it particularly important for franchisees to be aware of their conduct and potential legal risks.