factual

If a Craters & Freighters franchisee fails to pay an affiliate, is that considered a curable default?

Craters_Freighters Franchise · 2025 FDD

Answer from 2025 FDD Document

Item Provision Section in Franchise Agreement Summary
g. "Cause" defined – curable defaults Section 19.2 Curable Defaults: You have 30 days to cure
any of the following defaults: non-payment of
any amount due and owing to us or any
Affiliate of ours as required by us pursuant to
the Franchise Agreement, Operations Manuals,
or otherwise; failure or refusal to submit, when
due, any report or other data, information, or
supporting records relating to the Franchised
Business; failure or refusal to accurately report
the Adjusted Gross Sales of the Franchised
Business; failure or refusal to operate a
warehouse within the Premises necessary for
the operation of the Franchised Business;
uncured default under the Lease for the
Premises; offer or sale of any products or
services not authorized by us; failure or refusal
to comply with the Operations Manuals or,
more specifically, any of the System Standards;
failure or refusal to pay any taxes due in
connection with your operation of the
Franchised Business; failure or refusal to
obtain and/or maintain all applicable licenses
and permits relating to the operation of the
Franchised Business; failure or refusal to
obtain our written approval or consent when
required; or failure or refusal to comply with
any other provision of the Franchise
Agreement, Operations Manuals, or any
System Standard.

h. "Cause" defined – non-curable Section 19.1 Non-Curable Defaults: failure or refusal to defaults open the Franchised Business within 90 days after execution of the Franchise Agreement; the making of any material misrepresentation or omission in applying to be a Craters & Freighters franchisee; you or any other required attendee(s) fail to attend and complete, to our satisfaction, the initial training program; abandonment of the Franchised Business; criminal conduct by you, any principal owner of the franchisee entity, or any owner of franchisee entity owning more than owner of the franchisee entity, or any owner of franchisee entity owning more than 10% of the franchisee entity engages in any act or conduct which, in our sole determination, materially impairs the goodwill and/or reputation of the System or Marks, and you fail or refuse to take corrective measures to promptly minimize or eliminate the negative impact of such act or conduct; repeated non-payment of any amount due and owing to us or any Affiliate of ours as required by us pursuant to the Franchise Agreement, Operations Manuals, or otherwise; a course of conduct which includes any misrepresentations or deceptive or unlawful acts or practices in connection with offering and/or selling products and services to customers; failure, refusal, or neglecting to take appropriate and necessary measures to protect any employee or customer from imminent and significant danger due to any health or safety matter in connection with the operation of the Franchised Business (or committing repeated violations of any health or safety-related law, standard, or practice); unauthorized use or disclosure of the Marks, Confidential Information, Trade Secrets, Operations Manuals, or Proprietary Software; intentional understatement of the Franchised Business's Adjusted Gross Sales in any report or financial statement; failure or refusal to comply with any of the in-term restrictive covenants set forth in the Franchise Agreement; uncured default under any other agreement with us or any of our Affiliates 10% of the franchisee entity; you, any principal (including, but not limited to, another franchise agreement or a promissory note);

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)

What This Means (2025 FDD)

According to Craters & Freighters' 2025 Franchise Disclosure Document, failure to pay an affiliate is initially considered a curable default.

The FDD states that a franchisee has 30 days to cure the default of non-payment of any amount due to Craters & Freighters or any of its affiliates. This includes amounts required under the Franchise Agreement, Operations Manuals, or otherwise. This means that if a franchisee fails to pay an affiliate, they will be given a 30-day period to rectify the situation and make the outstanding payment.

However, the FDD also indicates that repeated non-payment of any amount due to Craters & Freighters or any affiliate can be considered a non-curable default. This implies that while a single instance of non-payment is curable, a pattern of repeated non-payment can lead to immediate termination of the franchise agreement without an opportunity to cure the default. Therefore, it is critical for a Craters & Freighters franchisee to maintain timely payments to both the franchisor and its affiliates to avoid potential default and termination of the franchise agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.