What are some examples of non-curable defaults that could lead to termination of a Chocolate Fish Coffee franchise agreement?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| or other agreement | ||
| e. Termination by | Not Applicable | |
| franchisor without cause | ||
| f. Termination by | We may terminate your agreement for cause, | |
| franchisor with cause | subject to any applicable notice and cure opportunity. If you sign a Multi-Unit Development Agreement, termination of your MUDA does not give us the right to terminate your franchise agreement. However, if your franchise agreement is terminated, we have the right to terminate your MUDA. | |
| g. “Cause” defined-- | Non-payment by you (10 days to cure); violate | |
| curable defaults | franchise agreement other than non-curable default (30 days to cure). | |
| h. “Cause” defined--non- | FA: Misrepresentation when applying to be a | |
| curable defaults | 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, or plea to a felony, or commission 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. | |
| i. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 33–36)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, there are specific actions that constitute non-curable defaults, which means the franchisee does not have an opportunity to correct the issue before the franchise agreement is terminated. These defaults relate to severe breaches of the agreement or actions that significantly harm the Chocolate Fish Coffee brand.
Examples of non-curable defaults include misrepresentation when applying to become a franchisee, knowingly submitting false information, bankruptcy, losing possession of the franchise location, violating laws, breaching confidentiality or non-compete agreements, slandering or libeling Chocolate Fish Coffee, refusing to cooperate with business inspections, or ceasing operations for more than five consecutive days. Additionally, having three defaults within a 12-month period, cross-termination (termination of another agreement), conviction of or pleading to a felony, or committing an act that could unfavorably affect the Chocolate Fish Coffee brand are also considered non-curable defaults.
For franchisees with a Multi-Unit Development Agreement (MUDA), failure to meet the development schedule or violating the franchise agreement or any other agreement that gives Chocolate Fish Coffee the right to terminate it are also non-curable defaults. These terms are important for prospective franchisees to understand, as these actions can lead to immediate termination of the franchise agreement without an opportunity to rectify the situation.