Is notice required before Deck Medic automatically terminates a franchise agreement due to insolvency?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
Michigan FDD Amendment Amendments to the Deck Medic Franchise Disclosure Document
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- THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
- A. A prohibition of your right to join an association of Franchisees.
- B. A requirement that you assent to a release, assignment, novation, waiver or estoppel that deprives you of rights and protections provided in this act. This shall not preclude you, after entering into a Franchise Agreement, from settling any and all claims.
- C. A provision that permits us to terminate a franchise before the expiration of this term except for good cause. Good cause shall include your failure to comply with any lawful provision of the Franchise Agreement and to cure the failure after being given written notice of the failure and a reasonable opportunity, which in no event need be more than 30 days, to cure the failure.
- D. A provision that permits us to refuse to renew a franchise without fairly compensating you by repurchase or other means for the fair market value at the time of expiration of your inventory, supplies, equipment, fixtures and furnishings. Personalized materials that have no value to us and inventory, supplies, equipment, fixtures and furnishings not reasonably required in the conduct of the franchise
Source: Item 23 — RECEIPTS (FDD pages 43–228)
What This Means (2024 FDD)
Based on the 2024 Deck Medic Franchise Disclosure Document excerpts, the requirement of notice before termination due to insolvency is not explicitly detailed. However, an amendment for Michigan franchisees states that a franchise can only be terminated for good cause, which includes failure to comply with the Franchise Agreement, and the franchisee must be given written notice of the failure with a reasonable opportunity (no more than 30 days) to cure it. This suggests that at least in Michigan, some form of notice and opportunity to cure may be required even in cases that could lead to termination, such as insolvency.
Amendments for Minnesota, Virginia, North Dakota, and Washington are included in the FDD, and these amendments address franchise rights, termination, and non-renewal rights in those states. For example, Minnesota requires 180 days' notice of nonrenewal in certain cases. Virginia prohibits canceling a franchise without reasonable cause. North Dakota states that provisions requiring franchisees to consent to termination or liquidated damages are not enforceable. Washington states that the Washington Franchise Investment Protection Act may supersede the franchise agreement in areas of termination and renewal.
Because the documents do not specifically address notice requirements for termination due to insolvency outside of the Michigan amendment, prospective franchisees should seek clarification from Deck Medic regarding the specific conditions under which the franchise agreement can be terminated, and what, if any, notice and cure periods apply, particularly in the state where they plan to operate their franchise. It would also be prudent to consult with a franchise attorney to understand their rights and obligations under the franchise agreement and applicable state laws.