Under what circumstances can a Coffee News franchise agreement be terminated due to a breach or default?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
13. BREACH, DEFAULT AND TERMINATION.
- 13.1 Breach by Franchisee. If Franchisee breaches or defaults under any provision of this Agreement, Franchisor shall have all rights and remedies permitted by law or equity, including, but not limited to, the right of termination. Any termination by Franchisor shall have no effect upon Franchisee's obligation to pay the non-refundable deposit due in accordance with subparagraph 2.1 (a) and/or Schedule A. The forfeiture by Franchisee of such non-refundable deposit in the case of termination shall be liquidated damages and not a penalty. For the purposes of this paragraph, a default or breach shall include, but not be limited to, the following:
- (a) Unlicensed Distribution. The printing or distribution of unlicensed or unauthorized issues of the Periodical, either hardcopies or digital versions.
- (b) Similar Publication. The printing, distribution or participation in, directly or indirectly, any publication of a similar type to the Periodical.
- (c) Insolvency. The insolvency, bankruptcy or placement in receivership of Franchisee.
- (d) Criminal Offenses. The conviction of Franchisee or its principal shareholder with a major criminal offense which, by its nature and by the potential long-term imprisonment threatened, would result in serious damage to the reputation of the Periodical or the effective business operation of Franchisor.
- (e) Attachment or Seizure. Attachment or seizure of any of Franchisee's assets, provided Franchisor is certain that such seizure or attachment is an extreme threat to the continued successful operation of the exclusive license.
- (f) Nonpayment. Failure to pay when due the deposit payments, due in accordance with subparagraph 2.1 (a) and/or Schedule A, or weekly fees, due in accordance with subparagraph 2.1(b) and/or Schedule A, for sixty (60) consecutive days whether or not Franchisor has advised Franchisee in writing of such failure.
- (g) Mental Incompetency. The mental incompetency of Franchisee, its operator or principal shareholder.
- (h) Breach or Default. The Breach or default by Franchisee under any other contract or agreement between Franchisee and Franchisor.
- (i) Lack of Communication. The Franchisee has not communicated with Franchisor within 10 weeks of Franchisor's three (3) attempts of contact via phone, email or such other reasonable methods.
- (j) Others. Failure to
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, the franchise agreement can be terminated if a franchisee breaches or defaults under any provision of the agreement. In such cases, Coffee News has all rights and remedies permitted by law, including the right of termination. This termination does not affect the franchisee's obligation to pay the non-refundable deposit. The forfeiture of this deposit is considered liquidated damages and not a penalty.
The document specifies several events that constitute a default or breach. These include the unlicensed distribution of the Coffee News periodical, whether in hard copy or digital format, and involvement in a similar publication. Insolvency, bankruptcy, or placement in receivership of the franchisee also constitute grounds for termination.
Further reasons for termination include a conviction of the franchisee or its principal shareholder with a major criminal offense that could damage the reputation of Coffee News, or attachment or seizure of the franchisee's assets that threatens the business. Failure to make deposit payments or weekly fees for sixty consecutive days, and the mental incompetency of the franchisee, its operator, or principal shareholder are also grounds for termination.
Additionally, a breach or default by the franchisee under any other contract or agreement with Coffee News, and a lack of communication from the franchisee within 10 weeks of Coffee News's three attempts to contact them via phone, email, or other reasonable methods, can lead to termination. These terms are typical in franchise agreements, designed to protect the franchisor's brand and ensure compliance among franchisees.