Is a Crawlspace Medic franchisee entitled to notice before the Franchise Agreement terminates automatically for non-curable defaults?
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 the 2024 Crawlspace Medic Franchise Disclosure Document, the Franchise Agreement will terminate automatically, without notice, for non-curable defaults. These defaults include insolvency, bankruptcy, written admission of inability to pay debts, receivership, levy, composition with creditors, an unsatisfied final judgment for more than 30 days, or a foreclosure proceeding that is not dismissed within 30 days.
Crawlspace Medic can terminate the Franchise Agreement with notice if the franchisee does not open the Franchised Business within the required time frames, falsifies any report, ceases operations for 5 days or more (unless the vehicle is being repaired/replaced), fails to restore and reopen the Franchised Business within 120 days after a casualty, fails to comply with applicable laws, defaults under any lease for the premises, understates Gross Revenue two or more times, fails to comply with insurance and indemnification requirements, attempts an unauthorized transfer, or fails to transfer as required upon death or permanent disability.
Additional causes for termination with notice include misrepresentation or omission of a material fact in applying for the Franchise, conviction or pleading no contest to a felony or crime that could damage the goodwill or reputation of the Marks or the System, receiving an adverse judgment in any proceeding involving allegations of fraud, racketeering or improper trade practices, concealing revenues or maintaining false books, creating a threat or danger to public health or safety, refusing an inspection or audit, unauthorized use of Marks, copyrighted material or Confidential Information, unauthorized disclosure of Confidential Information, failure to comply with non-competition covenants, defaulting in obligations three or more times during the term or receiving two or more default notices in any 12-month period, defaulting under any other agreement with Crawlspace Medic or its affiliate, having insufficient funds to honor a check or EFT two or more times within any twelve-month period, failing to maintain Minimum Performance Requirements in any single year of operation, or terminating the Franchise Agreement without cause. A Crawlspace Medic franchisee has 5 days to cure non-payments and any other defaults (except for non-curable defaults).