Under what circumstances can Crawlspace Medic terminate the Development Agreement without cause, as referenced in section 7.2.10?
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 Crawlspace Medic's 2024 Franchise Disclosure Document, section 7.2 outlines specific defaults that allow Crawlspace Medic to terminate the Development Agreement without providing an opportunity for the developer to cure the default. However, section 7.2.10 is not listed in the provided FDD excerpt.
Based on the provided information, Crawlspace Medic can terminate the agreement if the developer: misrepresents or omits material facts in the application for development rights; falsifies any required report; fails to comply with applicable laws and regulations related to the Crawlspace Medic outlets; fails to develop outlets according to the Mandatory Development Schedule; attempts an unauthorized transfer of the agreement; is convicted of a felony or a crime damaging the brand's goodwill; receives an adverse judgment in cases involving fraud or unfair trade practices; fails to comply with non-disclosure and non-competition covenants; or defaults under any agreement with Crawlspace Medic or its affiliates without curing the default within the specified time.
Since the FDD excerpt does not contain a section 7.2.10, it is important for a prospective franchisee to ask Crawlspace Medic for clarification on what specific circumstances, if any, are covered under section 7.2.10 that would allow Crawlspace Medic to terminate the Development Agreement without cause. Understanding all termination conditions is crucial for assessing the risks and obligations associated with the Development Agreement.