What right does Craters & Freighters have upon delivery of the Default Notice?

According to the 2025 Craters & Freighters Franchise Disclosure Document, upon delivery of a Default Notice, Craters & Freighters has the right, but not the obligation, to cure any default(s) by the franchisee under the lease within thirty (30) days after delivery of the Default Notice. Craters & Freighters must notify the landlord in writing whether it intends to cure the default(s) of the franchisee and take an automatic assignment of the franchisee's interest in the lease.

This means that if a Craters & Freighters franchisee fails to meet their lease obligations, the landlord will notify Craters & Freighters. Craters & Freighters then has the option to step in and correct the franchisee's default, such as unpaid rent, within a 30-day period. If Craters & Freighters chooses to do so, they will take over the franchisee's lease agreement.

This arrangement protects Craters & Freighters by ensuring the location remains operational, which is crucial for maintaining brand presence and customer service. It also provides a safety net for the franchisee, as Craters & Freighters can prevent eviction and business closure in certain circumstances. However, Craters & Freighters is not obligated to intervene, so the franchisee ultimately bears the responsibility for meeting their lease obligations. This clause is part of an addendum to the lease agreement between the landlord and the franchisee, ensuring that the franchisor's rights are clearly defined and agreed upon by all parties involved.

This type of clause is not uncommon in franchise agreements, particularly for businesses that rely heavily on their physical location. It allows the franchisor to maintain control over the brand and ensure continuity of operations, while also providing some level of support to franchisees facing financial difficulties.