What happens if a Crave franchisee defaults on the Development Agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the Franchise Disclosure Document for CRAVE Franchising, LLC for use in the Commonwealth of Virginia shall be amended as follows:
- Additional Disclosure: The following statements are added to Item 17.h:
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the franchise agreement and development agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, the provision may not be enforceable.
The provisions in the Multi-Unit Development Agreement which provide for termination upon bankruptcy of the multi-unit developer may not be enforceable under federal bankruptcy law (11 U.S.C.
Section 101 et seq.).
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU:
(a) A prohibition on the right of a franchisee to join an association of franchises.
(b) A requirement that a franchisee assent to a release, assignment, novation, waiver or estoppel which deprives a franchisee of rights and protections provided in this act.
This shall not preclude a franchisee, after entering into a franchise agreement, from settling all claims.
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than thirty (30) days, to cure such failure.
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures and furnishings.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
I am unable to provide information about the specific consequences if a Crave franchisee defaults on the Development Agreement, according to the 2025 Franchise Disclosure Document excerpts provided. The excerpts do contain information regarding addendums to the franchise agreement required by certain states, including Virginia, Maryland, and Michigan, that address terminations, waivers, and other provisions.
Specifically, the Virginia addendum states that it is unlawful for a franchisor to cancel a franchise without reasonable cause, and if any grounds for default or termination stated in the franchise agreement and development agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, the provision may not be enforceable. The Maryland addendum states that provisions in the Multi-Unit Development Agreement which provide for termination upon bankruptcy of the multi-unit developer may not be enforceable under federal bankruptcy law. The Michigan disclosure prohibits certain unfair provisions that are sometimes in franchise documents, including a provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
To fully understand the implications of defaulting on the Crave Development Agreement, a prospective franchisee should carefully review the entire Franchise Disclosure Document, including the Development Agreement itself, and consult with a legal professional. It would be prudent to ask Crave's franchisor directly about the specific conditions that constitute a default and the remedies Crave may pursue in such a situation. This information is crucial for making an informed investment decision.