If a Crawlspace Medic franchisee has a receivership, is that a curable default?
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, a franchisee's receivership is defined as a non-curable default. This means that if a Crawlspace Medic franchisee enters into receivership, Crawlspace Medic can terminate the Franchise Agreement immediately without providing an opportunity to correct the situation.
The FDD specifies that the Franchise Agreement will terminate automatically, without notice, upon events like 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. These defaults are considered severe enough that Crawlspace Medic does not offer an opportunity for the franchisee to rectify the situation.
This policy is relatively standard in franchising, as these types of financial defaults indicate a significant risk to the Crawlspace Medic system. The franchisor wants to protect the brand and other franchisees from the potential negative impacts of a financially unstable franchisee. A prospective franchisee should understand these terms and ensure they have sufficient financial resources and business acumen to avoid such situations.