If a Crave franchisee's Franchise Agreement is terminated, what impact does this have on the Multi-Unit Development Agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi Unit Development Agreement | Summary | |
|---|---|---|---|
| h. | "Cause" defined – non curable defaults | 9 | Failure to meet your minimum performance schedule; failure to comply with applicable laws; if all of your Franchised Businesses stop operating; unauthorized transfer; you make a material misrepresentation to us; conviction by you or your owners of an indictable offense; bankruptcy or insolvency; if a Franchise Agreement with us is terminated according to its terms (this is a cross-default provision) |
| i. | Multi-unit developer's obligations on termination/ non-renewal | 10 | You must stop selecting sites for Franchised Businesses, and you may not open any more Franchised Businesses |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 50–56)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the termination of a Franchise Agreement can have significant implications for a Multi-Unit Development Agreement. Specifically, if a Franchise Agreement is terminated according to its terms, it constitutes a non-curable default under the Multi-Unit Development Agreement. This is characterized as a cross-default provision, meaning a default under one agreement triggers consequences in another.
Upon termination of a Franchise Agreement, Crave multi-unit developers face immediate restrictions. They must cease selecting new sites for Franchised Businesses and are prohibited from opening any additional Franchised Businesses. This severely limits their expansion capabilities and overall investment potential with Crave.
This cross-default provision is a critical consideration for prospective Crave multi-unit developers. It highlights the interconnectedness of the agreements and the potential for a single franchise's issues to impact the entire development plan. Franchisees should carefully review the conditions under which a Franchise Agreement can be terminated and understand the ramifications for their broader development obligations.