Does a default by a Dryject franchisee under another agreement with an affiliate of the franchisor constitute a default under the franchise agreement?

According to Dryject's 2025 Franchise Disclosure Document, a default by a franchisee under any agreement with Dryject or its affiliates will be considered a default under the franchise agreement. This is known as a cross-default provision. Conversely, any default by the franchisee under the franchise agreement is also considered a default under all other agreements between the franchisee and Dryject or its affiliates.

This cross-default clause has significant implications for Dryject franchisees. If a franchisee has multiple agreements with Dryject or its affiliates (such as financing agreements, leases, or other business arrangements), a default in any one of those agreements can trigger a default in the franchise agreement itself. This could lead to termination of the franchise and loss of the business.

Dryject retains the right to terminate all agreements between the franchisee and Dryject or its affiliates if a default under any other agreement would have permitted Dryject to terminate the franchise agreement had the default occurred under the franchise agreement itself. This provision gives Dryject broad powers to terminate multiple agreements based on a single default, increasing the risk for franchisees. Franchisees should carefully review all agreements with Dryject and its affiliates to understand the potential consequences of a default under any single agreement.

Cross-default clauses are relatively common in franchising, but the specific terms can vary. Prospective Dryject franchisees should seek legal counsel to fully understand the implications of this clause and how it might affect their overall business relationship with Dryject.