Is misrepresentation when applying to be an Ella Cafe franchisee considered a non-curable default?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or | Summary |
|---|---|---|
| other agreement | ||
| If you sign a MUDA, you may terminate | ||
| it at any time. | ||
| e. Termination by | None None | |
| franchisor without cause | ||
| f. Termination by | We may terminate your agreement for | |
| franchisor with cause | ||
| cause, subject to any applicable notice | ||
| and cure opportunity. | ||
| If you sign a MUDA, termination of | ||
| your MUDA does not give us the right | ||
| to terminate your franchise agreement. | ||
| However, if your franchise agreement is | ||
| terminated, we have the right to | ||
| terminate your MUDA. | ||
| g. “Cause” defined-- curable defaults | FA: Section 14.3, 14.4 | Non-payment by you (10 days to cure); violate franchise agreement other than non-curable default (30 days to cure). Non-payment by you (10 days to cure); |
| MUDA: Article 9 | violate franchise agreement other than | |
| non-curable default (30 days to cure). | ||
| h. “Cause” defined-- | FA: Section 14.1, 14.2 | FA: Misrepresentation when applying to |
| non-curable defaults | ||
| MUDA: Article 4, 9 | be a franchisee; knowingly submitting | |
| false information; bankruptcy; lose | ||
| possession of your location; violation of | ||
| law; violation of confidentiality; | ||
| violation of non-compete; violation of | ||
| transfer restrictions; slander or libel of | ||
| us; refusal to cooperate with our | ||
| business inspection; cease operations for | ||
| more than 5 consecutive days; three | ||
| defaults in 12 months; cross-termination; | ||
| charge or | ||
| accusation of an act that is reasonably | ||
| likely to materially and unfavorably | ||
| affect our brand; any other breach of | ||
| franchise agreement which by its nature | ||
| cannot be cured. | ||
| MUDA: failure to meet development | ||
| schedule; violation of franchise | ||
| agreement or other agreement which | ||
| gives us the right to terminate it. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 41–45)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, misrepresentation when applying to be a franchisee is considered a non-curable default. This means that if Ella Cafe discovers that a franchisee misrepresented information during the application process, Ella Cafe has grounds to terminate the franchise agreement without providing an opportunity for the franchisee to correct the misrepresentation.
Other actions that Ella Cafe considers non-curable defaults include knowingly submitting false information, bankruptcy, losing possession of the location, violating laws, violating confidentiality or non-compete agreements, transferring restrictions, slandering or libeling Ella Cafe, refusing to cooperate with business inspections, ceasing operations for more than five consecutive days, incurring three defaults within 12 months, cross-termination, making accusations that could negatively affect the brand, or any breach of the franchise agreement that cannot be cured.
For a Multi-Unit Development Agreement (MUDA), non-curable defaults include failure to meet the development schedule or violating the franchise agreement or other agreements, which gives Ella Cafe the right to terminate it. This is a significant point for prospective franchisees to consider, as any misrepresentation during the application could lead to immediate termination of the franchise agreement.