Under what circumstances can CB Franchising issue a Holdover Notice to a Chocolate Bash franchisee?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
on) and must be: (1) delivered personally; (2) sent by registered or certified U.S. mail with return receipt requested; or (3) sent via overnight courier. Notwithstanding the foregoing, CB Franchising may amend the Manual, give binding notice of changes to System Standards, and deliver notices of default by electronic mail or other electronic communication.
- 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") e
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising can issue a Holdover Notice if a franchisee continues to operate the business after the franchise term expires without a renewal agreement or a successor franchise agreement. This applies regardless of any previous course of dealing between the parties.
CB Franchising has two options upon issuing a Holdover Notice. First, they can immediately terminate the Franchise Agreement, effective upon giving the notice or on a date specified in the notice. Second, they can bind the franchisee to a renewal term, the length of which is not specified in the excerpt but is represented by a blank space in the agreement.
If Chocolate Bash chooses to bind the franchisee to a renewal term, the franchisee and its owners are deemed to have made a general release of liability as described in Section 3.2(vi) of the Franchise Agreement. This means the franchisee gives up certain rights to sue or make claims against Chocolate Bash. This holdover provision gives Chocolate Bash significant leverage over franchisees whose terms have expired but continue to operate.