Can Devon Creek cure a franchisee's default instead of terminating the agreement?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.4 Franchisor's Cure of Franchisee's Defaults.
In the event of a default by Franchisee, in addition to Franchisor's right to terminate the Franchise Agreement, and not in lieu thereof, Franchisor may, but has no obligation to:
17.4.1 effect a cure on Franchisee's behalf and at Franchisee's expense, and Franchisee shall immediately pay Franchisor the costs incurred by Franchisor upon demand; or
17.4.2 exercise complete authority with respect to the operation of the Franchise Business until such time as Franchisor determines that the default of Franchisee has been
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, in the event of a default by the franchisee, Devon Creek has the option, but not the obligation, to cure the default on the franchisee's behalf, in addition to its right to terminate the Franchise Agreement. If Devon Creek chooses to cure a default, it will be at the franchisee's expense, and the franchisee must immediately pay Devon Creek the costs incurred upon demand.
Additionally, Devon Creek may exercise complete authority over the operation of the franchise business until it determines that the franchisee's default has been resolved. This means Devon Creek can step in and manage the business operations directly to rectify the issues causing the default.
This clause provides Devon Creek with flexibility in handling franchisee defaults. It is not obligated to cure defaults, but it has the option to do so, potentially preserving the franchise relationship. However, the franchisee bears the financial burden of any cure undertaken by Devon Creek, and Devon Creek has the right to take over business operations during the cure period.