What is an example of an Event of Default related to card sales for an Even Hotels franchisee?

According to Even Hotels' 2025 Franchise Disclosure Document, an Event of Default can occur due to "Irregular Card sales by you, excessive Chargebacks, or any other circumstances which, in our sole discretion, may increase our exposure for your Chargebacks or otherwise present a financial or security risk to us." This means that if an Even Hotels franchisee engages in unusual credit card processing activities or accumulates a high number of chargebacks, the franchisor can declare them in default of their agreement.

This clause gives Even Hotels broad discretion to determine what constitutes a risk based on card sales. The franchisor could claim default not only for fraudulent activities, but also for business practices that, in their view, increase financial risk.

If an Event of Default occurs, Even Hotels has the right to terminate the agreement immediately and demand that all outstanding payments become due. This could have significant financial implications for the franchisee, potentially leading to the loss of their franchise and substantial financial liabilities. Prospective franchisees should seek clarification from Even Hotels regarding what specific card sales activities could trigger this clause and what metrics are used to assess financial or security risks.