What is the consequence of Crave Cookies Franchising terminating a franchise agreement with an affiliate of the franchisee?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- **4.
Default and Termination.** The MUDA is automatically terminated without opportunity for Franchisee to cure, if any of the following occur:
(ii) Crave Cookies Franchising has the right to terminate any franchise agreement between Crave Cookies Franchising and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not Crave Cookies Franchising actually terminates such franchise agreement).
**5.
Limitation of Liability.** Franchisee's commitment to develop Crave Cookies businesses is in the nature of an option only.
If Crave Cookies Franchising terminates this MUDA for Franchisee's default, Franchisee shall not be liable to Crave Cookies Franchising for lost future revenues or profits from the unopened Crave Cookies businesses.
Source: Item 23 — RECEIPTS (FDD pages 47–194)
What This Means (2025 FDD)
According to the 2025 Crave Cookies Franchise Disclosure Document, if Crave Cookies Franchising has the right to terminate any franchise agreement between Crave Cookies Franchising and the franchisee (or any affiliate thereof) due to the franchisee's default, Crave Cookies Franchising can automatically terminate the Multi-Unit Development Agreement (MUDA) without allowing the franchisee an opportunity to remedy the situation.
This means that if a franchisee or an affiliated entity breaches a franchise agreement, Crave Cookies has the right to terminate not only the specific franchise agreement that was violated but also the MUDA. This is a significant risk for multi-unit franchisees, as a default at one location could jeopardize their entire development agreement with Crave Cookies. The franchisee's commitment to develop Crave Cookies businesses is considered an option only, and if the MUDA is terminated due to the franchisee's default, the franchisee will not be liable to Crave Cookies for lost future revenues or profits from unopened Crave Cookies businesses.
Prospective franchisees should carefully consider the implications of this clause, especially if they plan to operate multiple Crave Cookies locations through different legal entities. It would be prudent to seek legal counsel to fully understand the potential risks and to negotiate terms that may mitigate the impact of a default by an affiliated entity. Franchisees should also ensure they have robust compliance measures in place across all their locations to minimize the risk of default and potential termination of the MUDA.