Is slander or libel against Chocolate Bash considered a non-curable default?
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, slander or libel against the company is considered a non-curable default under the Franchise Agreement (FA). This means that if a franchisee engages in such behavior, Chocolate Bash has grounds to terminate the franchise agreement immediately without providing an opportunity to correct the action. This is outlined in Section 14.2 of the Franchise Agreement. The same condition applies under the Multi-Unit Development Agreement (MUDA) under Section 4.
Non-curable defaults are serious breaches of the franchise agreement that allow Chocolate Bash to protect its brand and reputation. Other actions that constitute a non-curable default include misrepresentation when applying to be a franchisee, knowingly submitting false information, bankruptcy, losing possession of the location, violation of law, violation of confidentiality, violation of non-compete, violation of transfer restrictions, refusal to cooperate with business inspections, ceasing 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 the brand, and any other breach of franchise agreement which by its nature cannot be cured. For MUDA, failure to meet the development schedule or violation of the franchise agreement or other agreement which gives Chocolate Bash the right to terminate it are also considered non-curable defaults.
For a prospective Chocolate Bash franchisee, this underscores the importance of maintaining a positive relationship with the franchisor and adhering to the terms of the franchise agreement. Engaging in slander or libel can have severe consequences, leading to immediate termination of the franchise. Franchisees should ensure they understand all the terms that constitute non-curable defaults to avoid unintentional breaches that could jeopardize their investment.
This type of clause is relatively common in franchise agreements, as franchisors need to protect their brand image. However, the specific actions that constitute a non-curable default can vary. It is crucial for potential franchisees to carefully review the franchise agreement and seek legal counsel to fully understand their obligations and the potential consequences of non-compliance.