Under what circumstances can Crawlspace Medic terminate the Development Agreement without cause?
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, Crawlspace Medic can terminate the Development Agreement without giving the developer an opportunity to cure under specific circumstances. These circumstances include misrepresenting or omitting material facts when applying for development rights, falsifying any required reports, failing to comply with applicable laws and regulations related to the Crawlspace Medic outlets, and failing to develop outlets according to the Mandatory Development Schedule.
Additional reasons for immediate termination include attempting an unauthorized transfer of rights, being convicted of a felony or any crime that could damage the brand's goodwill, receiving an adverse judgment or consent decree involving allegations of fraud or unfair trade practices that could negatively impact the Crawlspace Medic system, failing to comply with non-disclosure and non-competition agreements, or defaulting under any agreement with Crawlspace Medic, its affiliates, or suppliers without rectifying the default within the specified time.
These stipulations are important for potential Crawlspace Medic developers to understand, as they outline the conditions under which their development agreement can be immediately terminated, leading to a loss of development rights without a chance to correct the issue. This differs from situations where a franchisee might have a period to address and resolve a breach of contract. Therefore, developers need to ensure full compliance with all terms and conditions of the agreement to avoid such termination.