What are the non-curable defaults that will automatically terminate 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 the 2024 Crawlspace Medic Franchise Disclosure Document, there are specific non-curable defaults that will result in the automatic termination of the Franchise Agreement. These defaults, as outlined in Sections 17.1 and 17.2 of the Franchise Agreement, include situations indicating financial instability or failure to meet financial obligations.
Specifically, the agreement will terminate automatically, without notice, if the franchisee experiences insolvency, declares bankruptcy, makes a written admission of inability to pay debts, enters receivership, faces a levy, reaches a composition with creditors, has an unsatisfied final judgment for more than 30 days, or undergoes a foreclosure proceeding that is not dismissed within 30 days. These conditions are considered severe enough to warrant immediate termination due to the potential risk they pose to the Crawlspace Medic system and brand reputation.
Prospective Crawlspace Medic franchisees should understand these terms thoroughly, as these defaults cannot be corrected or remedied once they occur. This differs from curable defaults, where the franchisee has a specified period to rectify the issue. The presence of these non-curable defaults highlights the importance of maintaining financial stability and adhering to legal and financial obligations throughout the franchise term.