What is the deadline for an Exit franchisee to open their office and commence business operations to avoid default?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) Franchisee fails to open its EXIT office and commence business operations within one hundred and twenty (120) days of the date of this Agreement.
(ii) Franchisee voluntarily abandons the franchise by failing to operate the franchise in accordance with the terms of this Agreement, within the Protected Territory for a period of ten (10) consecutive days, or for twenty (20) days in any period of thirty (30) consecutive days, unless such failure is due to fire, flood, earthquake or similar cause beyond Franchisee's control.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee must open their Exit office and commence business operations within 120 days of the franchise agreement date. Failure to do so constitutes an event of default, which may allow the subfranchisor to terminate the agreement after providing notice to the franchisee. In this scenario, the franchisee would not have the right to cure the default.
This requirement is further emphasized in Section 3.1(A) of the agreement, which states that the franchisee must open and operate a franchise office within the protected territory within 120 calendar days from the agreement date. The franchisee must also secure subfranchisor approval for the office location. If the franchisee has not selected a site, if the franchisee and subfranchisor cannot agree on a site, or if the franchisee has not opened its office within 120 days after signing the Franchise Agreement, the subfranchisor may declare the Franchise Agreement null and void, without the return of any Initial Franchise Fee or other amounts paid to Subfranchisor or Franchisor.
The franchise agreement also includes a 'Compliance Date,' which must be within 120 days of the agreement date. While it is customary to allow franchisees the full 120 days, the agreement remains in effect if the franchisee opens prior to this date. The compliance date is important because it marks the start of the performance standards and the term of the contract.
Prospective Exit franchisees should be aware of this deadline and ensure they have a viable plan for securing a location, obtaining necessary permits and equipment, and commencing operations within the specified timeframe. Failure to meet this deadline could result in the termination of the franchise agreement and the loss of the initial franchise fee.