Under the Dryject franchise agreement, what constitutes a cross-default?

According to Dryject's 2025 Franchise Disclosure Document, a cross-default occurs when a franchisee defaults on any agreement they have with Dryject or its affiliates; conversely, a default under the franchise agreement is considered a default under all other agreements between the parties. This means that if a Dryject franchisee has multiple agreements with the franchisor (or its affiliates), such as a loan agreement or a separate supply agreement, a default in any one of those agreements triggers a default in all of them, including the franchise agreement itself.

This provision has significant implications for a prospective Dryject franchisee. It creates a situation where a relatively minor default under one agreement could lead to the termination of the entire franchise relationship. For example, a late payment on a loan from Dryject could not only trigger penalties under the loan agreement but also give Dryject the right to terminate the franchise agreement.

The FDD specifies that if the default under another agreement would have permitted Dryject to terminate the franchise agreement had the default occurred under the franchise agreement itself, then Dryject has the right to terminate all other agreements between Dryject and the franchisee or its affiliates. This clause underscores the interconnectedness of all agreements and the potential for a single default to have far-reaching consequences. Prospective franchisees should carefully review all agreements with Dryject and its affiliates to fully understand the implications of this cross-default provision.