Under the Crave franchise agreement, can a default by an affiliated company under a lease with Crave's affiliate be considered a default under the franchise agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
Any default by you (or any person/company affiliated with you) under this Agreement may be regarded as a default under any other agreement between us (or any of our affiliates) and you (or any of your affiliates). Any default by you (or any person/company affiliated with you) under any other agreement, including, but not limited to, any lease and/or sublease, between us (or any of our affiliates) and you (or any person/company affiliated with you), and any default by you (or any person/company affiliated with you) under any obligation to us (or any of our affiliates) may be regarded as a default under this Agreement. Any default by you (or any person/company affiliated with you) under any lease, sublease, loan agreement, security interest or otherwise, whether with us, any of our affiliates and/or any third party may be regarded as a default under this Agreement and/or any other agreement between us (or any of our affiliates) and you (or any of your affiliates).
In each of the foregoing cases, we (and any of our affiliates) will have all remedies allowed at law, including termination of your rights (and/or those of any person/company affiliated with you) and our (and/or our affiliates') obligations. No right or remedy which we may have (including termination) is exclusive of any other right or remedy provided under law or equity and we may pursue any rights and/or remedies available.
17.4 Our Right to Discontinue Services to You
If you are in breach of any obligation under this Agreement, and we deliver to you a notice of termination pursuant to this Article 17, we have the right to suspend our performance of any of our obligations under this Agreement including, without limitation, the sale or supply of any services or products for which we are an approved supplier to you and/or suspension of your Franchised Business' listing or your "click though" subpage on our website, until such time as you correct the breach.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a default by a franchisee (or any person/company affiliated with the franchisee) under a lease with Crave (or any of its affiliates) can be considered a default under the franchise agreement. This also applies to any other agreement or obligation between the franchisee (or their affiliates) and Crave (or its affiliates). Furthermore, a default under any lease, sublease, loan agreement, or security interest with Crave, its affiliates, or any third party can be considered a default under the franchise agreement or any other agreement between Crave (or its affiliates) and the franchisee (or their affiliates).
This cross-default provision means that if a franchisee or their affiliated company fails to meet their obligations under a lease agreement with Crave or its affiliates, Crave can consider this a default under the franchise agreement itself. This gives Crave significant leverage and the ability to take action against the franchisee, even if the default is technically under a separate agreement. The FDD states that Crave and its affiliates have all remedies allowed at law, including termination of the franchisee's rights and Crave's obligations.
Crave also has the right to suspend its performance of any obligations under the agreement if the franchisee is in breach of any obligation. This includes suspending the sale or supply of any services or products for which Crave is an approved supplier and/or suspension of the franchisee's business listing on Crave's website. This right to discontinue services remains until the franchisee corrects the breach.
Prospective franchisees should carefully consider the implications of these cross-default provisions and seek legal counsel to fully understand their rights and obligations. It is important to assess the risk of default under any related agreements, as such defaults could trigger serious consequences under the franchise agreement.