What is the standard cure period for curable defaults under the Ella Cafe franchise agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
of default pursuant to this Section 9. within any rolling 12-month period, whether or not the defaults described in such notices ultimately are cured.
- 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.
- 9.4. Termination With 30-Day Cure Period. Except as otherwise provided in this Section 9., Franchisor has the right to terminate this Agreement, which termination will become effective upon delivery of written notice of termination, if Developer fails to cure any curable default within 30 days after delivery of written notice.
- 9.5. Termination Related to Death or Permanent Incapacity. Franchisor has the right to terminate this Agreement if an approved transfer as required by Section 8.8. is not effected within the designated time frame following a permanent disability.
- 9.6. Cross-Default. Any default under any agreement between Developer or its Affiliates and Franchisor or its Affiliates, which Developer or its Affiliates fail to cure within any applicable cure period, will be considered a default under this Agreement and will provide an independent basis for termination of this Agreement.
- 9.7. Additional Remedies. If Developer is in default of this Agreement, in lieu of termination as provided for in Sections 9.2., 9.3., and 9.4., Franchisor may, in its sole discretion, elect to reduce the number of Coffee Houses Developer has the right to establish pursuant to the Development Schedule and or modify the size of the Development Area.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the standard cure period for most curable defaults is 30 days. Specifically, if a franchisee fails to meet obligations under the franchise agreement, Ella Cafe will provide written notice, and the franchisee then has 30 days to correct the issue.
However, the FDD also specifies certain defaults that have a shorter cure period of only 10 days. These include failure to pay amounts due to Ella Cafe or its affiliates, failure to pay trade creditors, or failure to pay amounts for which Ella Cafe has advanced funds or acted as a guarantor on the franchisee's behalf.
Additionally, there are instances where Ella Cafe can terminate the agreement immediately without any opportunity to cure. These include failure to adhere to the development schedule, conviction of a felony, unauthorized transfer of the franchise, failure to comply with confidentiality or non-competition agreements, material misrepresentations in the application, or receiving three or more written notices of default within a 12-month period. Therefore, prospective franchisees should be aware that the cure period depends on the nature of the default.