Does the Crawlspace Medic Franchise Agreement include a section on 'Defaults'?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.2 Defaults with No Opportunity to Cure. Developer shall be deemed to be in material default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording Developer any opportunity to cure the default, effective immediately upon notice to Developer, if Developer:
- 7.2.1 has misrepresented or omitted material facts in applying for the development rights granted hereunder;
- 7.2.2 falsifies any report required to be furnished Franchisor hereunder;
- 7.2.3 fails to comply with any federal, state or local law, rule or regulation, applicable to the development and operations of Developer's Crawlspace Medic outlets, including, but not limited to, the failure to pay taxes;
- 7.2.4 fails to develop the Crawlspace Medic outlets in accordance with the Mandatory Development Schedule.
- 7.2.5 attempts a Transfer in violation of the provisions of Article 6 of this Agreement;
- 7.2.6 is convicted of, or pleads no contest to, a felony or to a crime that could damage the goodwill associated with the Marks or does anything that may harm the reputation of the System or the goodwill associated with the Marks;
- 7.2.7 receives an adverse judgment or a consent decree in any case or proceeding involving allegations of fraud, racketeering, unfair or improper trade practices or similar claim which is likely to have an adverse effect on the System, or the Marks, the goodwill associated therewith or Franchisor's interest therein, in Franchisor's sole opinion;
- 7.2.8 fails to comply with the non-disclosure and non-competition covenants in Article 8 hereof;
- 7.2.9 defaults, or an affiliate of Developer defaults, under any other agreement, including any Franchise Agreement, with Franchisor, or any of Franchisor's affiliates or suppliers, or a landlord and does not cure such default within the time period
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
Yes, according to the 2024 Crawlspace Medic Franchise Disclosure Document, the Franchise Agreement includes a section addressing defaults. Specifically, section 7.2 outlines instances of material default that allow Crawlspace Medic to terminate the agreement without providing an opportunity for the franchisee to cure the default. These instances range from misrepresentation of facts during the application process to failing to comply with laws and regulations pertinent to the operation of Crawlspace Medic outlets.
Other default scenarios that trigger immediate termination include falsifying reports to the franchisor, failing to adhere to the mandatory development schedule, attempting unauthorized transfers of the franchise, conviction of a felony or any crime damaging the brand's goodwill, receiving adverse judgments related to fraud or unfair trade practices, and breaching non-disclosure or non-competition agreements. Furthermore, default by the franchisee or their affiliate under any agreement with Crawlspace Medic, its affiliates, suppliers, or landlords, without timely cure, also constitutes grounds for immediate termination.
This section of the Franchise Agreement is critical for prospective Crawlspace Medic franchisees to understand, as it clearly defines the actions or omissions that can lead to immediate termination of their franchise rights. The breadth of these conditions underscores the importance of maintaining ethical and legal compliance, fulfilling development obligations, and adhering to all contractual agreements associated with the Crawlspace Medic franchise. Franchisees should be aware that any missteps in these areas could result in the loss of their franchise without an opportunity to rectify the situation.