Under the Crave Franchise Agreement, what is considered a material and essential obligation, the breach of which may result in termination?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| 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 | 10 | You must stop selecting sites for Franchised | |
| obligations on termination/ | Businesses, and you may not open any more | ||
| non-renewal | Franchised Businesses | ||
| j. Assignment of contract by franchisor | 11 | No restriction on our right to assign. However, no assignment will be made except to an assignee who, in our good faith judgment, is willing and able to assume our obligations under the Multi-Unit Development Agreement. | |
| k. “Transfer” by multi-unit | 11 | Includes transfer of any interest in the Multi- | |
| developer – defined | Unit Development Agreement | ||
| l. Franchisor approval of transfer by multi-unit developer | 11 | We have the right to approve all transfers, our consent not to be unreasonably withheld | |
| m. Conditions for franchisor approval of transfer | 11 | Conditions for transfer include not being in default, at least 25% of all Franchised Businesses required to be developed are open or under construction, all debts are paid, the buyer meets our current criteria for new Multi- Unit Developers, execution of a general release, payment of transfer fee, buyer personally guarantees all obligations | |
| n. Franchisor’s right of first | 11 | We have the right to match the offer. | |
| refusal to acquire multi- | |||
| unit developer’s business | |||
| o. Franchisor’s option to | Not applicable | Not applicable | |
| purchase multi-unit | |||
| developer’s business | |||
| p. Death or disability of multi-unit developer | 11 | The rights granted under the Multi-Unit Development Agreement will terminate upon your death or permanent disability, unless transferred to a third-party approved by us within six months. | |
| Provision | Section in Franchise Agreement | Summary your original contract, but the boundaries of your territory will remain the same, and the fees in the successor agreement will not be greater than the fees that we then impose on similarly situated franchisees with successor agreements. | |
| d. | Termination by franchisee | Not applicable | You may seek termination upon any grounds available by state law. |
| e. | Termination by franchisor without cause | Not applicable | The Franchise Agreement will terminate upon your death or permanent disability and the Franchised Business must be transferred withing six months to a replacement franchisee that we approve. |
| f. | Termination by franchisor with cause | Section 17.1.1 | Each of your obligations under the Franchise Agreement is a material and essential obligation, the breach of which may result in termination. |
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, each obligation under the Franchise Agreement is considered material and essential. Therefore, any breach of these obligations may result in the termination of the agreement. This means that a franchisee must adhere to all terms and conditions outlined in the agreement to avoid potential termination.
This provision is standard in franchise agreements, as it protects Crave's brand standards and operational consistency. Franchisees should carefully review the Franchise Agreement to understand all their obligations, ensuring they can meet these requirements before investing in a Crave franchise.
Examples of potential defaults that could lead to termination if not cured include suspension of a beer and wine license, failure to pay monies owed to Crave or its affiliates, failure to maintain required insurance, or failure to maintain quality standards. Non-curable defaults that may lead to termination include insolvency, selling unauthorized products or services, failure to remodel when required, repeated defaults, or maintaining false books or records.