Under what conditions can Chocolate Fish Coffee unilaterally terminate a franchise agreement?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
person, and Franchisee fails to cure such danger within 48 hours after becoming aware of the danger (due to notice from Chocolate Fish Franchising or otherwise);
(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) Chocolate Fish 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 Chocolate Fish Franchising the right to terminate this Agreement);
(xiii) Franchisee or any Owner is charged with, pleads guilty or no-contest to, or is convicted of a felony; or
(xiv) Franchisee or any Owner is accused by any governmental authority or third party of any act, or if Franchisee or any Owner commits any act or series of acts, that in Chocolate Fish Franchising's opinion is reasonably likely to materially and unfavorably affect the Chocolate Fish Coffee brand.
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 Chocolate Fish Franchising based on the operation of the Business through the effective date of termination or expiration;
(ii) return to Chocolate Fish Franchising all copies of the Manual, Confidential Information and any and all other materials provided by Chocolate Fish 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 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, Chocolate Fish Franchising can terminate the Franchise Agreement under several specific conditions. These include situations where the franchisee's actions pose an immediate danger to customers or employees, such as failing to address a dangerous condition within 48 hours of becoming aware of it. Chocolate Fish Franchising can also terminate the agreement if the franchisee receives two or more default notices within a 12-month period and then commits another breach of the agreement.
Additionally, Chocolate Fish Coffee can terminate the agreement if the franchisee or any owner is charged with, pleads guilty or no-contest to, or is convicted of a felony. The agreement can also be terminated if the franchisee or any owner is accused of any act that Chocolate Fish Franchising believes is reasonably likely to materially and unfavorably affect the Chocolate Fish Coffee brand. Furthermore, if the franchisee breaches any other agreement with Chocolate Fish Franchising (or any affiliate), Chocolate Fish Franchising has the right to terminate the franchise agreement.
Upon termination of the Franchise Agreement, the franchisee has several obligations. They must immediately pay all amounts owed to Chocolate Fish Franchising, return all copies of the Manual, Confidential Information, and any other materials provided by Chocolate Fish Franchising. The franchisee must also delete all Confidential Information and proprietary materials from electronic devices. Within 30 days after termination, the franchisee must also de-identify the location so that it no longer contains the Marks, signage, or any trade dress of a Chocolate Fish Coffee business.