Where are the defaults described that could lead to termination of the Crawlspace Medic franchise agreement?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
Section in Franchise Provision Agreement Summary h. "Cause" defined - non-curable Sections 17.1 and The Franchise Agreement will terminate defaults 17.2 automatically, without notice for the following defaults: insolvency; bankruptcy; written admission of inability to pay debts; receivership; levy; composition with creditors; unsatisfied final judgment for more than 30 days; or foreclosure proceeding that is not dismissed within 30 days. We may terminate the Franchise Agreement upon notice to you if you: do not open the Franchised Business within required time frames; falsify any report to us; cease operations for 5 days or more, unless your vehicle is being repaired/replaced; fail to restore and re open the Franchised Business within 120 days after a casualty; fail to comply with applicable laws; default under any lease for the premises; understate Gross Revenue two (2) or more times; fail to comply with insurance and indemnification requirements; attempt a transfer in violation of the Franchise Agreement; fail, or your legal representative fails to transfer as required upon your death or permanent disability; misrepresent or omit a material fact in applying for the Franchise; are convicted or plead no contest to a felony or crime that could damage the goodwill or reputation of the Marks or the System; receive an adverse judgment in any proceeding involving allegations of fraud, racketeering or improper trade practices or similar claim that could damage the goodwill or reputation of the Marks or the System; conceal revenues or maintain false books; create a threat or danger to public health or safety; refuse an inspection or audit by us; use the Marks, copyrighted material or Confidential Information in an unauthorized manner; make an unauthorized disclosure of Confidential Information; fail to comply with non competition covenants; default in the performance of your obligations three (3) or more times during the term or receive two (2) or more default notices in any 12-month period; default under any other agreement with us or our affiliate; have insufficient funds to honor a check or EFT two (2) or more times within any twelve (12)-month period; fail to maintain Minimum Performance Requirements in any single year of operation; or terminate the Franchise Agreement without cause.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–38)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, Item 17 details the conditions under which the franchise agreement can be terminated. The agreement will automatically terminate, without notice, if the franchisee becomes insolvent, bankrupt, admits inability to pay debts, enters receivership, faces a levy, makes a composition with creditors, has an unsatisfied final judgment for more than 30 days, or undergoes a foreclosure proceeding not dismissed within 30 days.
Crawlspace Medic may terminate the franchise agreement with notice if the franchisee fails to open the franchised business on time, falsifies reports, ceases operations for five or more days (unless due to vehicle repair/replacement), fails to reopen after a casualty within 120 days, violates applicable laws, defaults on a premises lease, understates gross revenue two or more times, fails to meet insurance and indemnification requirements, or attempts an unauthorized transfer.
Further grounds for termination include failure to transfer the franchise as required upon death or disability, misrepresentation or omission of facts in the franchise application, conviction of a felony or crime damaging the brand's reputation, adverse judgments involving fraud or improper trade practices, concealing revenues or maintaining false books, creating a public health or safety threat, refusing inspections or audits, unauthorized use of trademarks or confidential information, violating non-competition covenants, repeated defaults, defaults under other agreements with Crawlspace Medic, insufficient funds for checks or EFTs, failure to meet minimum performance requirements, or terminating the agreement without cause.
These termination conditions are typical in franchise agreements to protect the franchisor's brand and ensure compliance. A prospective Crawlspace Medic franchisee should carefully review these conditions to understand their obligations and the potential consequences of non-compliance.