Does Crawlspace Medic have an obligation to cure a franchisee's 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)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, under certain circumstances, Crawlspace Medic does not have an obligation to allow a franchisee the opportunity to cure a default. Specifically, if a franchisee is in material default, Crawlspace Medic can terminate the agreement without providing an opportunity to cure under certain conditions.
The conditions under which Crawlspace Medic can immediately terminate the agreement include misrepresentation or omission of material facts during the application process, falsifying reports, failure to comply with laws and regulations, failure to meet the development schedule, attempting an unauthorized transfer of the franchise, conviction of a felony or a crime damaging the brand's goodwill, receiving an adverse judgment related to fraud or unfair practices, failure to comply with non-disclosure and non-competition covenants, or defaulting under any agreement with Crawlspace Medic or its affiliates without curing the default within the specified time period.
This means that a Crawlspace Medic franchisee needs to be extremely careful in adhering to all legal, financial, and operational requirements. Failure to do so could result in immediate termination of the franchise agreement without any chance to correct the issue. This is a stricter stance than some franchisors take, as many allow a cure period for most defaults, providing an opportunity for franchisees to rectify the situation before termination.