Under what conditions can Devon Creek terminate the franchise agreement without giving the franchisee an opportunity to cure the default?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
17.2.12 conceals revenues, knowingly maintains false books or records, or knowingly submits any false reports;
17.2.13 creates a threat or danger to public health or safety from operation of the Franchised Business;
17.2.14 refuses to permit Franchisor to inspect or audit Franchisee's books or records;
17.2.15 makes any unauthorized use of the Marks or copyrighted material or any unauthorized use or disclosure of Confidential Information (as defined in Section 19.2);
17.2.16 fails to comply with the non-competition covenants in Section 19.5;
17.2.17 defaults in the performance of Franchisee's obligations under this Agreement five (5) or more times during the term of this Agreement or any renewals or has been given at least two (2) notices of default in any consecutive twelve (12)–month period, whether or not the defaults have been corrected;
17.2.18 has insufficient funds to honor a check or electronic funds transfer two (2) or more times within any consecutive twelve (12)-month period;
17.2.19 defaults, or an affiliate of Franchisee defaults, under any other agreement, including any other franchise agreement, with Franchisor or any of its affiliates, or suppliers and does not cure such default within the time period provided in such other agreement; or
17.2.20 terminates this Agreement without cause.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, there are several conditions under which Devon Creek can terminate the franchise agreement immediately without providing an opportunity for the franchisee to cure the default. These include concealing revenues, knowingly maintaining false books or records, or knowingly submitting any false reports. Furthermore, creating a threat or danger to public health or safety from the operation of the franchised business also constitutes grounds for immediate termination. Refusing to permit Devon Creek to inspect or audit the franchisee's books or records is another condition that allows for immediate termination.
Unauthorized use of the Devon Creek marks or copyrighted material, or any unauthorized use or disclosure of confidential information, can also lead to immediate termination. Failing to comply with the non-competition covenants is another cause. Additionally, if a franchisee defaults in the performance of their obligations five or more times during the term of the agreement or has been given at least two notices of default in any consecutive twelve-month period, Devon Creek can terminate the agreement without an opportunity to cure, regardless of whether the defaults were corrected.
Having insufficient funds to honor a check or electronic funds transfer two or more times within any consecutive twelve-month period is also a non-curable default. If the franchisee, or an affiliate, defaults under any other agreement with Devon Creek or its affiliates or suppliers and does not cure the default within the time period provided in such other agreement, Devon Creek can terminate the franchise agreement immediately. Finally, if the franchisee terminates the agreement without cause, Devon Creek can immediately terminate the agreement without allowing an opportunity to cure the default.
These stipulations are important for a prospective Devon Creek franchisee to consider, as they outline specific behaviors and situations that can lead to the immediate loss of their franchise. Franchisees should ensure they fully understand these conditions and maintain strict compliance with the franchise agreement to avoid such outcomes. It is also worth noting that the frequency of defaults, even if corrected, can lead to termination, highlighting the importance of consistent adherence to the agreement's terms.