Under what circumstances can CB Franchising terminate the Chocolate Bash agreement without providing an opportunity to cure?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee breaches this Agreement in any manner not described in subsection (a) or (c), and Franchisee fails to cure such breach to CB Franchising's satisfaction within 30 days after CB Franchising gives notice to Franchisee of such breach, then CB Franchising may terminate this Agreement.
- (c) Without Cure Period. CB Franchising may terminate this Agreement by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee misrepresented or omitted material facts when applying to be a franchisee, or breaches any representation in this Agreement;
- (ii) Franchisee knowingly submits any false report or knowingly provides any other false information to CB Franchising;
- (iii) a receiver or trustee for the Business or all or substantially all of Franchisee's property is appointed by any court, or Franchisee makes a general assignment for the benefit of Franchisee's creditors or Franchisee makes a written statement to the effect that Franchisee is unable to pay its debts as they become due, or a levy or execution is made against the Business, or an attachment or lien remains on the Business for 30 days unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, CB Franchising can terminate the Franchise Agreement without providing an opportunity to cure under specific circumstances. These include situations where the franchisee misrepresented or omitted material facts when applying for the franchise or breaches any representation made in the agreement. Additionally, Chocolate Bash can terminate the agreement without a cure period if the franchisee knowingly submits any false report or provides false information to CB Franchising.
Furthermore, CB Franchising can terminate the agreement without allowing for a cure period if the franchisee receives two or more notices of default and then commits another breach of the agreement within a 12-month period. Another cause for immediate termination is if CB Franchising (or any affiliate) terminates any other agreement with the franchisee (or any affiliate) due to a breach of that agreement by the franchisee (or its affiliate). However, the termination of a Multi-Unit Development Agreement does not give CB Franchising the right to terminate the Franchise Agreement.
Finally, CB Franchising can terminate the agreement without a cure period if the franchisee or any owner is accused by a governmental authority or third party of any act that, in CB Franchising's opinion, is reasonably likely to materially and unfavorably affect the Chocolate Bash brand. This also applies if the franchisee or any owner is charged with, pleads guilty to, or is convicted of a felony. These stipulations are designed to protect the Chocolate Bash brand and ensure compliance and integrity among its franchisees.
These terms are fairly standard in the franchise industry, as franchisors typically reserve the right to terminate agreements immediately in cases of severe misconduct, legal issues, or repeated breaches to protect the brand and system standards. A prospective Chocolate Bash franchisee should carefully consider these conditions and ensure they understand their obligations to avoid potential termination without a cure period.