Under what grounds can a Crawlspace Medic franchisee seek termination of the 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, a franchisee can terminate the Franchise Agreement without cause. However, Crawlspace Medic can terminate the agreement with notice to the franchisee if the franchisee does not open the Franchised Business within the required time frames, falsifies any report to Crawlspace Medic, ceases operations for 5 days or more (unless the vehicle is being repaired/replaced), fails to restore and re-open the Franchised Business within 120 days after a casualty, fails to comply with applicable laws, defaults under any lease for the premises, understates Gross Revenue two (2) or more times, fails to comply with insurance and indemnification requirements, attempts a transfer in violation of the Franchise Agreement, fails to transfer as required upon death or permanent disability, misrepresents or omits a material fact in applying for the Franchise, is convicted or pleads no contest to a felony or crime that could damage the goodwill or reputation of the Marks or the System, receives 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, conceals revenues or maintains false books, creates a threat or danger to public health or safety, refuses an inspection or audit by Crawlspace Medic, uses the Marks, copyrighted material or Confidential Information in an unauthorized manner, makes an unauthorized disclosure of Confidential Information, fails to comply with non-competition covenants, defaults in the performance of obligations three (3) or more times during the term or receives two (2) or more default notices in any 12-month period, defaults under any other agreement with Crawlspace Medic or its affiliate, has insufficient funds to honor a check or EFT two (2) or more times within any twelve (12)-month period, fails to maintain Minimum Performance Requirements in any single year of operation, or terminates the Franchise Agreement without cause.
Additionally, the Franchise Agreement will terminate 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.
It is important for a prospective Crawlspace Medic franchisee to carefully review the conditions under which Crawlspace Medic can terminate the agreement, as these could have significant financial and operational implications. Understanding these termination conditions is crucial for assessing the risks and responsibilities associated with the franchise.