What constitutes a 'notice of default' for Crown Gold Exchange franchisees?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or consented to by Franchisee and the petition is not dismissed within 45 days, or Franchisee is adjudicated as bankrupt;
- (iv) Franchisee fails to open for business by the date specified on the Summary Page;
- (v) Franchisee loses possession of the Location;
- (vi) Franchisee or any Owner commits a material violation of Section 7.2 (compliance with laws) or Section 13.1 (confidentiality), violates Section 13.2 (non-compete) or Article 15 (transfer), or commits any other violation of this Agreement which by its nature cannot be cured;
- (vii) Franchisee abandons or ceases operation of the Business for more than five consecutive days;
- (viii) Franchisee or any Owner slanders or libels Crown Gold Franchising or any of its employees, directors, or officers;
- (ix) Franchisee refuses to cooperate with or permit any audit or inspection by Crown Gold Franchising or its agents or contractors, or otherwise fails to comply with Section 10.5 or Section 11.2;
- (x) the Business is operated in a manner which, in Crown Gold Franchising's reasonable judgment, constitutes a significant danger to the health or safety of any person, and Franchisee fails to cure such danger within 48 hours after becoming aware of the danger (due to notice from Crown Gold Franchising or otherwise);
- (xi) Franchisee has received two or more notices of default and Franchisee commits another breach of this Agreement, all in the same 12-month period;
- (xii) Crown Gold Franchising (or any affiliate) terminates any other agreement with Franchisee (or any affiliate) due to the breach of such other agreement by Franchisee (or its affiliate) (provided that termination of a Multi-Unit Development Agreement with Franchisee or its affiliate shall not give Crown Gold Franchising the right to terminate this Agreement);
- (xiii) Franchisee or any Owner is charged with, pleads guilty or no-contest to, or is convicted of a felony; or
- (xiv) Franchisee or any Owner is accused by any governmental authority or third party of any act, or if Franchisee or any Owner commits any act or series of acts, that in Crown Gold Franchising's opinion is reasonably likely to materially and unfavorably affect the Crown Gold Exchange brand.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, several actions or failures can lead to a 'notice of default' for a franchisee. These include failing to open the business by the date specified in the Summary Page, losing possession of the business location, or committing a material violation of compliance with laws or confidentiality agreements.
Further, a franchisee may receive a notice of default if they violate non-compete agreements, abandon the business for more than five consecutive days, slander or libel Crown Gold Franchising or its employees, or refuse to cooperate with audits or inspections. Operating the business in a way that poses a significant danger to health or safety and failing to correct it within 48 hours after awareness also constitutes grounds for default. Receiving two or more default notices within a 12-month period and then committing another breach of the Franchise Agreement will also trigger a default.
Additionally, if Crown Gold Franchising terminates any other agreement with the franchisee due to a breach, or if the franchisee or any owner is charged with, pleads guilty to, or is convicted of a felony, it can result in a notice of default. Finally, if a franchisee or owner is accused of any act that could materially and unfavorably affect the Crown Gold Exchange brand, this too can lead to a default notice.
Crown Gold Franchising retains the right to deliver notices of default via electronic mail or other electronic communication. It is important for prospective franchisees to understand these conditions, as failure to comply can lead to termination of the franchise agreement.