What constitutes a 'Material Breach default' of the Dryject Franchise Agreement?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
rformance of all the terms of this Agreement is necessary not only for Our protection, but also for the protection of You and Our other franchisees. As a result, You acknowledge and agree that the occurrence of any of the following events, each or any of which shall be considered a Material Breach default of this Agreement, constitutes reasonable grounds for termination of this Franchise Agreement by Us; provided, however that You shall be given the opportunity, within fifteen (15) days after receipt of written notice of such Material Breach, to cure the default by promptly providing proof of cure to Us. Notwithstanding the foregoing, if the breach is curable but is of a nature which cannot reasonably be cured within such fifteen (15) day period and You have commenced and are continuing to make good faith efforts to cure the breach, You shall be given an additional reasonable period of time to cure the default, and this Agreement shall not terminate. If any such default is not cured within the time as specified by Us, this Agreement shall terminate effective immediately without further notice to You. You shall be in default under this Agreement for failure to comply with any of the requirements imposed by the Agreement, or for failure to carry out the terms of this Agreement in good faith. Such defaults include, but are not limited to:
(i) A failure by You to remit any payments when due under this Agreement;
(ii) A failure by You to establish, equip, maintain, or update the Franchised Business in accordance with Our System Standards;
(iii) A failure by You to submit to Us financial reports or other information required under this Agreement, or a failure to allow reasonable access to Your records within the time periods required by this Agreement;
(iv) A failure by You to operate the Franchised Business in accordance with Our Operations Manual or other manuals, or a failure by You to use products, methods, equipment or suppliers which conform to Our System Standards, or Your failure to maintain Our System Standards of quality service in the operation of the Franchised Business;
(v) A failure by You to obtain Our prior written approval or consent as expressly required by this Agreement;
(vi) A failure by You to accurately or completely record all sales made in, upon or from the Franchised Business at the time of sale;
(vii) A breach by You of any other covenant, term, or provision of this Agreement;
(viii) A failure by You to open the Franchised Business within one hundred and eighty (180) days of the execution of this Agreement;
(ix) A failure by You to comply with any of Your agreements with any third parties as related to the Franchised Business; or,
(x) A failure by You to consistently pay the debts of the Franchised Business as they become due.
(c) In the event You are delivered two (2) or more notices of Material Breach from Us within a twelve (12) month period pertaining to any one (1) or more of the foregoing events of default whether or not cured after notice, during the initial Term or any renewal terms of this Agreement, We shall have the right to terminate this Agreement. The effective date of any such termination notice under this Subsection shall be upon the expiration of Your receipt of three (3) days written notice to that effect, or such longer period as may be required by law.
(d) Notwithstanding the foregoing, We shall deem You to be in material breach and, at Our option, may terminate this Agreement and all rights granted under it, without affording You any opportunity to cure the breach, effective immediately after written notice of termination is received by You, if You do any of the following:
- (i) Abandon, vacate, desert, surrender, transfer control or otherwise cease operation of the Franchised Business, or fail to continuously and actively operate the Franchised Business, or to do so for a period of five (5) consecutive days or any shorter period during the Franchised Business' operational season that indicates an intent by You to discontinue operation of the Franchised Business without Our express written consent, unless and only to the extent that You are precluded from doing so by damage to the Franchised Business due to war, act of God, civil disturbance, natural disaster, labor dispute or other events beyond Your reasonable control, and so long as within one hundred eighty (180) days, You have begun and diligently pursued relocation or re-establishment of the Franchised Business;
- (ii) Misuse the Licensed Rights, or any other names, marks, e-marks, systems, insignias, symbols, copyrights or rights provided by Us to You, or otherwise materially impair the goodwill associated therewith the Licenses Rights, or if You shall use at the Franchised Business any names, marks, e-marks, systems, insignias, symbols or copyrights
not authorized by Us;
- (iii) Consistently (e.g. twice or more in any twelve (12) month period) fail or refuse to submit when due any financial statement, tax return or schedule, or to pay when due the Royalty Service Fees or any other payments or to submit any required reports due to Us;
- (iv) Intentionally underreport Gross Revenues in any amount or negligently underreport Gross Revenues by five percent (5%) or more during any reporting period;
- (v) Operate the Franchised Business in a manner that violates any federal, state, or local law, rule, regulation or ordinance;
- (vi) Make a material misrepresentation to Us or on Your application to own and operate the Franchised Business or in conducting the Franchised Business;
- (vii) Attempt to transfer, assign or sub-franchise this Agreement without Our prior written consent as set forth in this Agreement;
- (viii) Disclose or divulge to any unauthorized person or entity or copy or reproduce any of the contents of the Operations Manual or any other trade secrets or Confidential Information provided to You by Us or any of Our subsidiaries or affiliates;
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to the 2025 Dryject Franchise Disclosure Document, several actions can constitute a 'Material Breach default' of the Franchise Agreement, leading to potential termination by Dryject. These include failing to remit payments when due, failing to maintain the franchised business according to Dryject's System Standards, and failing to submit required financial reports or allow access to records. Operating the business against the Operations Manual, using unapproved products or suppliers, or failing to maintain Dryject's quality service standards also constitute a material breach.
Further actions that constitute a material breach include failing to obtain prior written approval when required, inaccurately recording sales, breaching any term of the agreement, failing to open the business within 180 days of signing the agreement, failing to comply with agreements with third parties related to the business, or failing to consistently pay debts as they become due. Additionally, failing to maintain an independent contractor relationship with Dryject, defaulting on loans or leases required to operate the business, or creating conditions that present health or safety concerns can be considered a material breach.
Engaging in dishonest, untrustworthy, or fraudulent acts that fundamentally undermine the Franchise Agreement or irreparably damage trust also constitute a material breach. Committing a material breach that cannot be cured or having an undisclosed interest in a similar business within the designated territory are also grounds for termination. Moreover, specific actions like assigning assets for the benefit of creditors or filing for bankruptcy automatically terminate the agreement without notice. Receiving two or more notices of material breach within a 12-month period, even if cured, can also lead to termination.
It is important to note that Dryject typically provides an opportunity to cure the breach within fifteen days of written notice. However, if the breach is not curable within this period, an additional reasonable period may be granted if good faith efforts to cure are underway. Franchisees should carefully review the franchise agreement and related documents to fully understand what constitutes a material breach and the potential consequences.