What constitutes a Material Breach default of the Cinch I.T. 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.
(xvi) Commit a material breach that cannot be cured; or
(xvii) If, without Our prior written consent, You or persons controlling, controlled by, or under common control with You shall have any interest, direct or indirect, in the ownership or operation of any business engaged in the sale of similar or other related products or services within Your Designated Territory, or in any business, regardless of where located, that looks like, copies, or imitates any CINCH I.T. business, or operates in a manner tending to have such effect.
(e) Notwithstanding the foregoing provisions of this Section, You shall be in breach under this Agreement and all rights granted under this Agreement will automatically terminate without notice to You, if You do any of the following:
(i) Make an assignment for the benefit of creditors or an admission of Your inability to pay Your obligations as they become due; or
(ii) File a voluntary petition in bankruptcy or any pleading seeking any reorganization, arrangement, composition, adjustment, liquidation, dissolution or similar release under any law, or admit or fail to contest the material allegations of any such pleading or action for the
Failure by You to obtain execution of a covenant required by this Section 11 shall constitute a material default under Section 7 hereunder.
(a) You will use the Licensed Rights strictly in accordance with the terms of this Agreement. Any unauthorized use of the Licensed Rights is and shall be deemed an infringement of Our rights and a material breach of this Agreement.
- 8 (b) 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, there are several actions that would constitute a default under the agreement.
These include failing to comply with the Development Schedule, failing to perform obligations under the agreement or any individual Franchise Agreement, ceasing to be a franchisee in good standing, or failing to comply with the provisions on transfer. Additionally, committing a material breach that cannot be cured or having an undisclosed interest in a similar business within the designated territory also constitute default.
Furthermore, Cinch I.T. states that making an assignment for the benefit of creditors or admitting inability to pay obligations, filing for bankruptcy, or being adjudicated bankrupt or insolvent will result in an automatic termination of the agreement without notice. If a franchisee is in material default, Cinch I.T. has the right to suspend operating assistance.
Failure to obtain execution of a covenant required by Section 11 of the agreement also constitutes a material default under Section 7. Unauthorized use of licensed rights is considered a material breach. Any proposed assignment without prior written consent is a material default of the agreement.