Under the Crave Franchise Agreement, can a franchisee seek termination based on state law?
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. |
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, a franchisee has the right to seek termination of the Franchise Agreement based on grounds available under state law. This provision ensures that franchisees are not limited to only the termination clauses outlined in the Franchise Agreement itself and can leverage any additional protections or rights afforded to them by the laws of their specific state.
This is a significant benefit for prospective Crave franchisees, as state laws can vary widely and may offer avenues for termination that are not explicitly covered in the franchise agreement. For example, some states have franchise relationship laws that protect franchisees from unfair termination practices or provide specific remedies in the event of a dispute with the franchisor. By retaining the right to seek termination under state law, franchisees have an additional layer of security and recourse.
It is important for potential Crave franchisees to consult with an attorney who is knowledgeable about franchise law in their state to understand the specific rights and protections available to them. This will enable them to make informed decisions about their investment and to navigate any potential disputes with Crave effectively. While the FDD specifies that state law may provide grounds for termination, it does not detail what those grounds might be, so franchisees must conduct their own due diligence to understand their rights fully.