Under what conditions can the Devon Creek franchisor terminate the franchise agreement with cause?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
Section in Franchise Provision Agreement Summary h. "Cause" defined - non-curable Sections 17.1 and The Franchise Agreement will terminate I defaults 17.2 automatically, without notice for the following derdans 17.2 defaults: insolvency; bankruptcy; written admission of inability to pay debts; receivership; levy; composition with creditors; unsatisfied final judgment for more than fifteen (15) days; or foreclosure proceeding that is not disclosed within fifteen (15) days. We may terminate the Franchise Agreement upon notice to you if you: do not obtain required licenses and permits and/or open the Franchised Business within required time frames; falsify any report to us; fail to operate for a period of fifteen (15) consecutive days or more; fail to comply with applicable laws; understate Gross Revenue; fail to comply with insurance and indemnification requirements; attempt a transfer in violation of the Franchise Agreement; fail, or your legal representative fails to transfer as required upon your death or permanent disability; misrepresent or omit a material fact in applying for the Franchise; are convicted or plead no contest to a felony or crime that could damage the goodwill or reputation of the Marks or the System; receive an adverse judgment in any proceeding involving allegations of fraud, racketeering or improper trade practices or similar claim that could damage the goodwill or reputation of the Marks or the System; conceal revenues or maintain false books; create a threat or danger to public health or safety; refuse an inspection or audit by us; use the Marks, copyrighted material or Confidential Information in an unauthorized manner; make an unauthorized disclosure of Confidential Information; fail to comply with non-competition covenants; default in the performance of your obligations two (2) or more times during the term or receive two (2) or more default notices in any 12-month period regardless if they were timely cured; default under any other agreement with us or our affiliate; have insufficient funds to honor a check or EFT two (2) or more times within any twelve (12)-month period; fails to meet Minimum Performance Standards; or terminate the Franchise Agreement without _ cause.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 37–42)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the franchise agreement can be terminated with cause under several conditions. The agreement will automatically terminate without notice if the franchisee becomes insolvent or bankrupt, admits in writing their inability to pay debts, enters receivership, faces a levy or composition with creditors, has an unsatisfied final judgment for more than fifteen days, or experiences a foreclosure proceeding that isn't disclosed within fifteen days.
Devon Creek may terminate the Franchise Agreement with notice if the franchisee fails to obtain necessary licenses and permits or open the franchised business within the required timeframes, falsifies reports to Devon Creek, ceases operation for fifteen or more consecutive days, violates applicable laws, understates gross revenue, or fails to meet insurance and indemnification requirements. Further causes for termination include attempting an unauthorized transfer of the franchise, failing to transfer the franchise as required upon death or permanent disability, misrepresenting or omitting material facts in the franchise application, or being convicted of a felony or crime that could harm Devon Creek's reputation.
Additional causes for termination include receiving an adverse judgment involving fraud, racketeering, or improper trade practices that could damage Devon Creek's goodwill, concealing revenues or maintaining false books, creating a public health or safety threat, refusing inspections or audits, unauthorized use of trademarks or confidential information, violating non-competition covenants, defaulting on obligations multiple times, defaulting under other agreements with Devon Creek, having insufficient funds for checks or EFTs multiple times, failing to meet minimum performance standards, or terminating the Franchise Agreement without cause.
These stipulations are important for a prospective Devon Creek franchisee to consider, as they outline various operational and financial scenarios that could lead to termination of the franchise agreement. Franchisees should ensure they understand and can comply with all requirements to avoid potential termination.