What actions by a Cinch I.T. franchisee will result in automatic termination of the franchise agreement?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
You shall be in default under this Agreement should You (or Your affiliate): (a) fail to comply with the Development Schedule; (b) fail to perform any of Your obligations under this Agreement or any individual Franchise Agreement; (c) cease to be a Franchisee of Franchisor in good standing; or (d) fail to comply with the provisions on transfer contained herein.
Failure by You to adhere to the Development Schedule (including any extensions approved by Franchisor) shall constitute a material event of default under this Agreement.
In addition, if any individual Franchise Agreement issued to You or an approved affiliate of Yours, whether or not issued pursuant to this Agreement, is terminated for any reason, We shall have the right to terminate this Agreement on immediate written notice to You.
Neither You nor any affiliate, partner, member, or shareholder thereof shall, without Our prior written consent, directly or indirectly assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this Agreement or in the Multi-Unit Developer. Any proposed assignment occurring by operation of law or otherwise, including any assignment by a trustee in bankruptcy, without Our prior written consent, shall be a
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, a franchisee can be in default of their agreement if they or their affiliate: fail to comply with the Development Schedule, fail to perform any obligations under the agreement or any individual Franchise Agreement, cease to be a Franchisee of Franchisor in good standing, or fail to comply with the provisions on transfer contained within the agreement.
Failure to adhere to the Development Schedule, including any extensions approved by Cinch I.T., is considered a material event of default. Franchisees must notify Cinch I.T. in writing at least 30 days before the Projected Opening Date if they cannot commence operations by the expiration date of the Development Period. This notice must include a request for an extension, reasons for the delay, the expected opening date, and payment of the Extension Fee if required.
Cinch I.T. retains the right to terminate the agreement if any individual Franchise Agreement issued to the franchisee or an approved affiliate is terminated for any reason. This includes agreements issued to corporations, limited liability companies, partnerships, or joint ventures in which the franchisee or their affiliates have a direct or indirect ownership or participation interest. Upon default, Cinch I.T. has the option to terminate the agreement, terminate the territorial rights granted to the franchisee, or reduce the size of the Development Area or the number of Cinch I.T. Franchised Businesses the franchisee may develop in the Development Area.
Furthermore, any proposed assignment of the agreement by the franchisee or any affiliate, partner, member, or shareholder without Cinch I.T.'s prior written consent, whether occurring by operation of law or otherwise, including any assignment by a trustee in bankruptcy, will be considered a default, potentially leading to termination. This highlights the importance of adhering to the Development Schedule and fulfilling all contractual obligations to avoid default and potential termination of the franchise agreement.