Under what condition can a Chocolate Bash franchisee terminate the franchise agreement?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
(xi) Franchisee has received two or more notices of default and Franchisee commits another breach of this Agreement, all in the same 12-month period;
(xii) CB Franchising (or any affiliate) terminates any other agreement with Franchisee (or any affiliate) due to the breach of such other agreement by Franchisee (or its affiliate) (provided that termination of a Multi-Unit Development Agreement with Franchisee or its affiliate shall not give CB Franchising the right to terminate this Agreement); or
(xiii) Franchisee or any Owner is accused by any 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, or is charged with, pleads guilty to, or is convicted of a felony.
14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:
(i) pay all amounts owed to CB Franchising based on the operation of the Business through the effective date of termination or expiration;
(ii) return to CB Franchising all copies of the Manual, Confidential Information and any and all other materials provided by CB Franchising to Franchisee or created by a third party for Franchisee relating to the operation of the Business, and all items containing any Marks, copyrights, and other proprietary items; and delete all Confidential Information and proprietary materials from electronic devices;
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a franchisee can have their franchise agreement terminated under several conditions. Specifically, the agreement can be terminated if the franchisee receives two or more notices of default and then commits another breach of the agreement within a 12-month period. Additionally, if CB Franchising terminates any other agreement with the franchisee (or an affiliate) due to a breach of that agreement by the franchisee (or its affiliate), this can also lead to the termination of the Chocolate Bash franchise agreement. However, the termination of a Multi-Unit Development Agreement does not give CB Franchising the right to terminate the franchise agreement.
Another condition that could lead to termination is 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. Termination can also occur if the franchisee or any owner is charged with, pleads guilty to, or is convicted of a felony.
Upon termination or expiration of the franchise agreement, the franchisee has several obligations. They must immediately pay all amounts owed to CB Franchising based on the operation of the business through the effective date of termination or expiration. The franchisee must also return all copies of the Manual, Confidential Information, and any other materials provided by CB Franchising, including items containing any Marks, copyrights, and other proprietary items. Furthermore, the franchisee must delete all Confidential Information and proprietary materials from electronic devices. These post-termination obligations are standard in franchise agreements to protect the franchisor's brand and proprietary information.