factual

What constitutes a material default with no opportunity to cure for a Cilantro Taco Grill franchisee?

Cilantro_Taco_Grill Franchise · 2024 FDD

Answer from 2024 FDD Document

  • 17.2 Defaults with No Opportunity to Cure.

Franchisee shall be deemed to be in material default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording Franchisee any opportunity to cure the default, effective immediately upon notice to Franchisee, if Franchisee, or any Principal, as the case may be:

  • 17.2.18 makes any unauthorized use of the Marks or copyrighted material or any unauthorized use or disclosure of Confidential Information (as defined in Section 19.2);

  • 17.2.19 fails to comply with the non-competition covenants in Section 19.5;

  • 17.2.20 defaults in the performance of Franchisee's obligations under this Agreement three (3) or more times during the term of this Agreement or has been given at least two (2) notices of default in any consecutive twelve (12)–month period, whether or not the defaults have been corrected;

  • 17.2.21 has insufficient funds to honor a check or electronic funds transfer two (2) or more times within any consecutive twelve (12)-month period;

  • 17.2.22 defaults, or an affiliate of Franchisee defaults, under any other agreement, including any other franchise agreement, with Franchisor or any of its affiliates, suppliers or landlord and does not cure such default within the time period provided in such other agreement;

  • 17.2.23 terminates this Agreement without cause;

  • 17.2.24 fails to propose a qualified replacement or successor General Manager and/or Manager within the time required under Section 11.3.3 following ten (10) days' prior written notice;or

  • 17.2.25 breaches in any material respect any of the covenants set forth in Article 11 or have falsely made any of the representations or warranties set forth in Article 11;

Source: Item 23 — RECEIPT (FDD pages 52–208)

What This Means (2024 FDD)

According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, there are several instances that constitute a material default, allowing Cilantro Taco Grill to terminate the agreement without giving the franchisee an opportunity to cure the default. These defaults are effective immediately upon notice.

These instances include making unauthorized use of the Cilantro Taco Grill marks or copyrighted material, or any unauthorized use or disclosure of confidential information. A franchisee also faces immediate termination for failing to comply with non-competition covenants. Furthermore, if a franchisee defaults in their obligations three or more times during the term of the agreement, or receives at least two notices of default within a twelve-month period (regardless of whether the defaults were corrected), it constitutes a material default with no opportunity to cure.

Additional defaults that trigger immediate termination include having insufficient funds to honor a check or electronic funds transfer two or more times within any consecutive twelve-month period, defaulting under any other agreement with Cilantro Taco Grill or its affiliates without curing the default within the specified time, terminating the agreement without cause, failing to propose a qualified replacement for a General Manager or Manager within the required time after notice, or breaching any material covenants or making false representations in Article 11 of the agreement. These stipulations highlight the importance of adhering to the franchise agreement and maintaining financial responsibility to avoid immediate termination.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.