If an Exit franchisee breaches another Exit franchise agreement, do they have a right to cure the default?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
controlled by Franchisee or by one or more of the equity holders of Franchisee, fails to pay, when due, any of its financial obligations to EXIT, Subfranchisor, other EXIT subfranchisor, or the Brokers' Council, including payments due under any promissory note executed by Franchisee pursuant to the terms of this Agreement.
(ii) Franchisee, or any entity controlled by Franchisee or by one or more of the equity holders of Franchisee, breaches any term of this Agreement, any other agreement granting an EXIT franchise,
or any rule, procedure, amendment, or supplement to this Agreement established by EXIT or Subfranchisor, including but not limited to, the Performance Standards provisions of Section 9.8 of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if a franchisee, or any entity controlled by them, breaches any term of another Exit franchise agreement with either the franchisor or another Exit subfranchisor, this constitutes an event of default.
The FDD specifies that in the event of such a breach, Exit's subfranchisor has the right to terminate the franchise agreement after providing notice to the franchisee. The franchisee is granted a right to cure the default, meaning they have an opportunity to rectify the breach within a specified timeframe to avoid termination.
This right to cure offers the franchisee a chance to correct the issue and maintain their franchise agreement. However, the subfranchisor retains the right to terminate the agreement if the breach is not resolved within the given cure period. It is important for prospective franchisees to understand the terms and conditions of all franchise agreements they enter into with Exit to avoid such defaults.