Under what conditions can Ella Cafe terminate a franchise agreement with cause?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or | Summary |
|---|---|---|
| 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. |
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, Ella Cafe can terminate the franchise agreement with cause, subject to any applicable notice and cure opportunity. The FDD outlines specific curable and non-curable defaults that constitute cause for termination.
Curable defaults, which allow the franchisee an opportunity to remedy the situation, include non-payment, which provides a 10-day cure period, and violating any other term of the franchise agreement, which provides a 30-day cure period.
Non-curable defaults, which do not require Ella Cafe to provide an opportunity to cure, include misrepresentation when applying to be a franchisee, knowingly submitting false information, bankruptcy, losing possession of the location, violating laws, violating confidentiality or non-compete agreements, violating transfer restrictions, slandering or libeling Ella Cafe, refusing to cooperate with business inspections, ceasing operations for more than 5 consecutive days, incurring three defaults within 12 months, cross-termination, making a charge or accusation that could negatively affect Ella Cafe's brand, or any other incurable breach of the franchise agreement.