What happens if the franchisee fails to satisfy the development schedule for Crown Gold Exchange?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
- 4. Default and Termination. Crown Gold Franchising may terminate this MUDA by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee fails to satisfy the development schedule; or
- (ii) Crown Gold Franchising has the right to terminate any franchise agreement between Crown Gold Franchising and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not Crown Gold Franchising actually terminates such franchise agreement).
- 5. Limitation of Liability. Franchisee's commitment to develop Crown Gold Exchange businesses is in the nature of an option only. If Crown Gold Franchising terminates this MUDA for Franchisee's default, Franchisee shall not be liable to Crown Gold Franchising for lost future revenues or profits from the unopened Crown Gold Exchange businesses. Franchisee may terminate this MUDA at any time.
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, if a franchisee fails to meet the development schedule outlined in the Multi-Unit Development Agreement (MUDA), Crown Gold Franchising has the right to terminate the MUDA. This termination can occur without providing the franchisee an opportunity to correct the failure.
However, the document also states that the franchisee's commitment to develop Crown Gold Exchange businesses is considered an option. If Crown Gold Franchising terminates the MUDA due to the franchisee's failure to adhere to the development schedule, the franchisee will not be held liable for any lost future revenues or profits that Crown Gold Franchising might have expected from the unopened Crown Gold Exchange businesses. The franchisee also has the option to terminate the MUDA at any time.
This arrangement provides some protection to the franchisee, limiting their liability to potential lost profits from future locations if development targets are not met. It is important for prospective franchisees to carefully review the development schedule within the MUDA and assess their ability to meet those targets, as failure to do so can result in the termination of the agreement by Crown Gold Exchange.