Under what circumstances can the Cilantro Taco Grill franchise agreement be terminated immediately without an opportunity to cure?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
Multi-Unit Operator shall be deemed to be in material default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording Multi-Unit Operator any opportunity to cure the default, effective immediately upon notice to Multi-Unit Operator, if Multi-Unit Operator:
7.2.1 has misrepresented or omitted material facts in applying for the development rights granted hereunder;
7.2.2 falsifies any report required to be furnished Franchisor hereunder;
7.2.3 fails to comply with any federal, state or local law, rule or regulation, applicable to the development and operations of Multi-Unit Operator's Cilantro Taco Grill outlets, including, but not limited to, Anti-Terrorism Laws and the RICO Act, and the failure to pay taxes;
7.2.4 fails to develop the Cilantro Taco Grill outlets in accordance with the Mandatory Development Schedule.
7.2.5 attempts a Transfer in violation of the provisions of Article 6 of this Agreement;
7.2.6 is convicted of, or pleads no contest to, a felony or to a crime that could damage the goodwill associated with the Marks or does anything that may harm the reputation of the System or the goodwill associated with the Marks;
7.2.7 receives an adverse judgment or a consent decree in any case or proceeding involving allegations of fraud, racketeering, unfair or improper trade practices or similar claim which is likely to have an adverse effect on the System, or the Marks, the goodwill associated therewith or Franchisor's interest therein, in Franchisor's sole opinion;
7.2.8 fails to comply with the non-disclosure and non-competition covenants in Article 8 hereof;
7.2.9 defaults, or an affiliate of Multi-Unit Operator defaults, under any other agreement, including any 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; or
7.2.10 terminates this Agreement without cause.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, the franchise agreement can be terminated immediately without an opportunity to cure under specific circumstances if the franchisee is a Multi-Unit Operator. These circumstances include misrepresentation or omission of material facts when applying for development rights, falsifying reports to the franchisor, or failing to comply with federal, state, or local laws applicable to the operation of Cilantro Taco Grill outlets, such as failing to pay taxes, violating Anti-Terrorism Laws, or violating the RICO Act.
Additional causes for immediate termination involve failing to develop Cilantro Taco Grill outlets according to the Mandatory Development Schedule, attempting an unauthorized transfer of the franchise, or being convicted of a felony or any crime that could damage the goodwill associated with the Cilantro Taco Grill brand. Receiving an adverse judgment or consent decree in cases involving fraud, racketeering, or unfair trade practices that could negatively affect the Cilantro Taco Grill system also constitutes grounds for immediate termination.
Furthermore, immediate termination can occur if the Multi-Unit Operator fails to comply with non-disclosure and non-competition covenants, defaults under any agreement with the franchisor or its affiliates without curing the default within the specified time, or terminates the agreement without cause. These stipulations are specific to Multi-Unit Operators, highlighting the higher expectations and stricter enforcement applied to those with broader development responsibilities within the Cilantro Taco Grill franchise system.