What constitutes a default under the Cinch I.T. Franchise Agreement?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
or each subsequent CINCH I.T. Franchised Business to be developed.
6. FRANCHISE AGREEMENT
You shall not commence opening any CINCH I.T. Franchised Business until the individual Franchise Agreement for said CINCH I.T. Franchised Business has been signed by both the Multi-Unit Developer, or its affiliate, and Franchisor.
7. DEFAULT AND TERMINATION
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.
Upon the default, We shall have the right, at Our option, and in Our sole discretion, to do any or all of the following:
- 7.1 terminate this Agreement;
- 7.2 terminate the territorial rights granted to You; or
- 7.3 reduce the size of Your Development Area or the number of CINCH I.T. Franchised Businesses You may develop in the Development Area.
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.
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, a franchisee will be in default of the Multi-Unit Development Agreement if they or their affiliate: fail to comply with the Development Schedule, fail to perform any obligations under the Multi-Unit Development Agreement or any individual Franchise Agreement, cease to be a Cinch I.T. franchisee in good standing, or fail to comply with the provisions regarding transfer of the agreement.
Additionally, the Cinch I.T. franchisee will be in default if they fail to obtain execution of a covenant required by Section 11 of the agreement. If a franchisee does not sell one new managed service provider contract for three consecutive months, Cinch I.T. will require the franchisee to undertake and complete a performance improvement plan over a consecutive three-month period. If after completion of the Performance Improvement Plan the franchisee does not sell one new Managed Service Provider contract within three months, they will be in default of their Franchise Agreement.
If the Multi-Unit Development Agreement is terminated, Cinch I.T. has the right to 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. Cinch I.T. also has the right to terminate the Multi-Unit Development Agreement with immediate written notice if any individual Franchise Agreement issued to the franchisee or an approved affiliate is terminated for any reason.