What constitutes a material default of the Closet Storage Concepts Franchise Agreement?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor and Franchisee agree that, for the purposes of this Section, such material default includes, but is not limited to, failure to make one hundred percent (100%) of all payments and submit reports within fifteen (15) days of the date they are actually due.
It is further agreed that such default also includes Franchisee's consistently demonstrated unwillingness to take remedial actions as recommended by Franchisor to improve Franchisee's sales and marketing methods, in accordance with Franchisee's obligations under this Agreement
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, a material default includes specific instances related to payments and required actions. Specifically, failing to make 100% of all payments and submit reports within 15 days of the due date is considered a material default. This means that franchisees must ensure timely and complete financial obligations to Closet Storage Concepts to avoid being in default of the agreement.
Additionally, a material default includes a consistently demonstrated unwillingness by the franchisee to take remedial actions recommended by Closet Storage Concepts to improve sales and marketing methods, as required by the Franchise Agreement. This implies that franchisees are expected to actively implement suggestions and strategies provided by Closet Storage Concepts to enhance their business performance. Failure to do so can be construed as a material default.
These conditions are important for prospective franchisees to understand, as a material default can have significant consequences, potentially impacting their ability to renew the franchise agreement or even leading to termination of the agreement. Franchisees should maintain diligent financial practices and be receptive to implementing recommended improvements to avoid these defaults.