What are the two options CB Franchising has when issuing a Holdover Notice to a Chocolate Bash franchisee?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.10 Holdover. If Franchisee continues operating the Business after the expiration of the term without a renewal agreement or successor franchise agreement executed by the parties in accordance with Section 3.2, then at any time thereafter (regardless of any course of dealing by the parties), CB Franchising may by giving written notice to Franchisee (the "Holdover Notice") either (i) terminate this Agreement effective immediately upon giving notice or effective on such other date as CB Franchising or (ii) bind Franchisee to a renewal term of [
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising has two options when issuing a Holdover Notice to a franchisee who continues to operate the business after the expiration of the franchise term, without a renewal or successor agreement.
First, CB Franchising can terminate the Franchise Agreement immediately upon giving the Holdover Notice, or on another date specified in the notice. This means Chocolate Bash can immediately end the franchise relationship if the franchisee continues to operate without a formal agreement.
Second, CB Franchising can bind the franchisee to a renewal term of a specified number of years (the length of which is not specified in the document but is represented by a blank space in the agreement). By doing so, the franchisee and its owners are deemed to have made a general release of liability as described in another section of the agreement. This implies that Chocolate Bash can force a renewal term on the franchisee, subject to the franchisee releasing them from certain liabilities.