What defaults allow an Ella Cafe franchisee to terminate the agreement with a 10-day cure period?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.3. Termination With 10-Day Cure Period.
Developer has the right to terminate this Agreement, which termination will become effective upon delivery of written notice of termination, if Developer fails to cure the following defaults within 10 days after delivery of written notice: (a) failure to pay any amounts due Franchisor or its Affiliates; (b) failure to pay any amounts due Developer's trade creditors (unless such amount is subject to a bona fide dispute); or (c) failure to pay any amounts for which Franchisor has advanced funds for or on Developer's behalf, or upon which Developer is acting as guarantor of Developer's obligations.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a franchisee (referred to as "Developer") has the right to terminate the agreement if Ella Cafe fails to cure certain defaults within 10 days after receiving written notice.
Specifically, the franchisee can terminate if Ella Cafe fails to pay any amounts due to the franchisee or its affiliates. This protects the franchisee from financial losses caused by the franchisor's payment defaults. The franchisee can also terminate if Ella Cafe fails to pay any amounts due to the franchisee's trade creditors, unless the amount is subject to a legitimate dispute. This provision ensures that the franchisee's business operations are not jeopardized by the franchisor's failure to meet its financial obligations to suppliers and other creditors.
Additionally, the franchisee can terminate if Ella Cafe fails to pay any amounts for which the franchisor has advanced funds for or on the franchisee's behalf, or upon which the franchisor is acting as a guarantor of the franchisee's obligations. This clause safeguards the franchisee in situations where the franchisor has provided financial support or guarantees and then fails to honor those commitments.