Under what circumstances can the Ella Cafe franchise agreement be terminated due to death or permanent incapacity?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
Upon the permanent disability of Developer (if Developer is a natural person) or any Principal who is a natural person, Franchisor may, in its sole discretion, require such interest to be transferred to a third party in accordance with the conditions described in this Section 8. within six months after notice to Developer. "Permanent disability" means any physical, emotional, or mental injury, illness, or incapacity which would prevent a person from performing the obligations set forth in this Agreement or in any guaranty made part of this Agreement for at least 90 consecutive days and from which condition recovery within 90 days from the date of determination of disability is unlikely.
Permanent disability will be determined by a licensed practicing physician selected by Franchisor, upon examination of the person; or if the person refuses to submit to an examination, then such person automatically will be deemed permanently disabled as of the date of such refusal for the purpose of this Section 8.8.2.
The costs of any examination required by this Section 8.8.2. will be paid by Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to the 2024 Ella Cafe Franchise Disclosure Document, the franchise agreement can be terminated under specific conditions related to death or permanent incapacity of the developer or a principal. If an approved transfer of the franchise interest, as required by Section 8.8 of the agreement, is not completed within a designated timeframe following a permanent disability, Ella Cafe has the right to terminate the agreement.
Regarding permanent disability, if the developer or any principal is a natural person, Ella Cafe has the discretion to require the franchise interest to be transferred to a third party within six months after receiving notice of the disability. "Permanent disability" is defined as a physical, emotional, or mental condition that prevents the person from fulfilling their obligations under the agreement or any related guaranty for at least 90 consecutive days, with recovery within another 90 days being unlikely.
The determination of permanent disability is made by a licensed physician selected by Ella Cafe, who will examine the person in question. If the person refuses to undergo the examination, they will automatically be deemed permanently disabled from the date of refusal for the purposes of this section. Ella Cafe will cover the costs of any required medical examination. These stipulations ensure that the franchise can continue operating effectively even if the original franchisee or a key principal becomes unable to manage the business.