Can Eos Worldwide terminate the franchise agreement without cause?
Eos_Worldwide Franchise · 2025 FDDAnswer from 2025 FDD Document
| e. Termination by franchisor | Not | We may not terminate without cause. | | without cause | Applicable | | | f. | 17.2-17.3 | Each of your obligations under the Franchise Agreement is a material | | Termination by franchisor | | and essential obligation, the breach of which may result in | | with cause | | termination. | | Provision | Section in Franchise Agreement | Summary | |--------------------------------------------------------|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | g. "Cause" defined – curable defaults | 17.3 | You have 30 days from our written notice to cure breaches of obligations, covenants or representations under the Franchise Agreement that are subject to cure, except that the following breaches provide a shorter time period specified in the Franchise Agreement: (i) you failed to timely remit the required monthly payments (10 days from our written notice); (ii) you fail to remit any other payments when due to us or our affiliates (payments (10 days from our written notice); (iii) you fail to remit any payments immediately when due to a supplier, vendor, broker, landlord, or other third party owed by the Franchised Business payments (30 days from our written notice); (iv) you make any unauthorized use of the Marks or violate the Intellectual Property provisions of the Franchise Agreement (5 business days from our written notice); (v) you fail to maintain proper insurance (5 business days from our written notice); (vi) you fail to pay your other debts or expenses (15 days from our written notice); or (vii) you fail to meet the minimum performance requirements (e.g., number of sessions, attendance at QCEs and ratings) and fail to meet those requirements with the participation in required remedial training (with | | h. "Cause" defined – non- curable defaults | 17.2 | at least a 30-day period to cure). Non-curable defaults include: (i) you are convicted of a crime of moral turpitude or theft; (ii) you engage in any misconduct or become involved in any situation or occurrence which actually hurts (or may hurt) the goodwill or reputation of EOS or the EOS Franchise System in a material manner or that otherwise brings you, us, our affiliates, or another EOS Implementer or any of our respective businesses into actual or potential public disrepute, contempt, scandal, or ridicule, or information becomes public of such conduct by you in the past; (iii) you make any unauthorized transfer of the Franchised Business or Franchise Agreement; (iv) your bankruptcy or insolvency; (v) you fail to successfully complete Boot Camp or other required training; (vi) you fail to meet the minimum performance requirements (e.g., number of sessions, attendance at QCEs and ratings) and fail to participate in required remedial training; (vii) you breach your in- term restrictive covenants; (viii) you knowingly fail to accurately report other payments due to us, our affiliates, or suppliers/creditors, or you commit any acts of fraud or misrepresentation; (ix) you default, on three (3) or more separate occasions within any term of your franchise, on any of your material obligations to us or an affiliate, whether or not cured (including failure to adhere to any of our Core Values); (x) you fail to commence business within the time prescribed in the Franchise Agreement; (xi) you fail to pay any taxes when due; or (xii) you make any misrepresentation on your franchise application or supporting documentation.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 54–59)
What This Means (2025 FDD)
According to the 2025 Eos Worldwide Franchise Disclosure Document, Eos Worldwide cannot terminate the franchise agreement without cause. The FDD outlines specific conditions under which Eos Worldwide can terminate the franchise agreement with cause, which are categorized into curable and non-curable defaults.
Curable defaults include breaches of obligations, covenants, or representations under the Franchise Agreement, with varying cure periods. For instance, failure to remit monthly payments requires a 10-day cure period after written notice, while unauthorized use of marks or violation of intellectual property provisions requires a 5-business day cure period. Non-curable defaults include convictions of crimes, engagement in misconduct that harms the goodwill of Eos Worldwide, unauthorized transfer of the franchise, bankruptcy, failure to complete required training, and repeated breaches of obligations.
These stipulations protect the franchisee by ensuring that Eos Worldwide must have a legitimate reason to terminate the agreement, and in many cases, the franchisee has an opportunity to correct the issue. This is a fairly standard practice in franchising, as it provides a level of security for franchisees who invest time and money into establishing their business. However, the franchisee should carefully review the definitions of 'cause' and the specific cure periods to fully understand their rights and obligations under the agreement.
Prospective franchisees should pay close attention to what constitutes a curable versus a non-curable default, as non-curable defaults can lead to immediate termination without an opportunity to rectify the situation. Understanding these terms is crucial for maintaining a successful and compliant franchise operation with Eos Worldwide.