If Devon Creek elects to cure a franchisee's default, who is responsible for the costs?
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, if a franchisee defaults, Devon Creek has the option to cure the default on the franchisee's behalf, but is not obligated to do so. If Devon Creek chooses to cure the default, the franchisee is responsible for immediately paying all costs incurred by Devon Creek.
In addition to curing the default, Devon Creek can also exercise complete authority over the operation of the franchise business until Devon Creek determines that the default has been cured and the franchisee is complying with the franchise agreement. During this period of interim management, the franchisee must pay Devon Creek the greater of 10% of gross revenue or $500 per day, along with any travel, lodging, meals, and other expenses reasonably incurred by Devon Creek.
Furthermore, Devon Creek reserves the right to direct suppliers to stop providing products and services to the franchisee, with three days' prior written notice to the franchisee, until the default is cured. The franchisee has no recourse against Devon Creek for any losses resulting from these actions. This could significantly impact the franchisee's ability to operate the business and generate revenue while attempting to resolve the default.