Does the Endless Summer Sweets Multi-Unit Development Agreement define 'cause' for termination?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| or other agreement | ||
| If you sign a Multi-Unit Development | ||
| Agreement, 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-- | Non-payment by you (10 days to cure); violate | |
| curable defaults | ||
| franchise agreement other than non-curable | ||
| default (30 days to cure). | ||
| h. “Cause” defined--non- | FA: Misrepresentation when applying to be a | |
| curable defaults | ||
| 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; | ||
| conviction of, or plea to a felony, or | ||
| commission 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 THE FRANCHISE RELATIONSHIP (FDD pages 30–34)
What This Means (2024 FDD)
According to Endless Summer Sweets's 2024 Franchise Disclosure Document, the Multi-Unit Development Agreement (MUDA) does define 'cause' for termination. The FDD outlines both curable and non-curable defaults that can lead to the termination of the MUDA.
Curable defaults for the franchise agreement include non-payment, with a 10-day cure period, and violating the franchise agreement (other than a non-curable default), with a 30-day cure period. Non-curable defaults under the franchise agreement include misrepresentation when applying to be a franchisee, knowingly submitting false information, bankruptcy, losing possession of the location, violating laws, confidentiality, or non-compete agreements, slandering or libeling Endless Summer Sweets, refusing to cooperate with business inspections, ceasing operations for more than 5 consecutive days, having three defaults within 12 months, cross-termination, conviction of a felony, or any breach that cannot be cured.
For the MUDA specifically, non-curable defaults include failure to meet the development schedule or violating the franchise agreement or any other agreement that gives Endless Summer Sweets the right to terminate it. This means that franchisees need to adhere to the development schedule outlined in the MUDA and ensure compliance with all agreements to avoid termination.
It is important to note that termination of the MUDA does not automatically terminate the franchise agreement, but termination of the franchise agreement gives Endless Summer Sweets the right to terminate the MUDA. Prospective franchisees should carefully review these termination clauses and seek legal counsel to fully understand their obligations and potential risks.