How long does the Exit Subfranchisor have to cure a default after receiving written notice from the franchisee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall have the right to terminate this Agreement by not less than thirty (30) days written notice to Subfranchisor, if Subfranchisor is in default in the performance or observance of any agreement, covenant, provision or term contained in this Agreement and the default, which remains uncured for more than thirty (30) days after written notice of the default is given to Subfranchisor. Franchisee waives all claims to all damages except direct damages necessarily arising from the alleged default against which notice is given and which remains uncured.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the franchisee has the right to terminate the agreement if the subfranchisor defaults on any term of the agreement, covenant, provision, or term. The franchisee must provide written notice to the subfranchisor of the default. The subfranchisor then has a period of thirty (30) days to cure the default after receiving the written notice. If the subfranchisor fails to cure the default within this 30-day period, the franchisee can terminate the agreement.
However, the franchisee's claims for damages are limited in this situation. The franchisee waives all claims to damages except for direct damages that necessarily arise from the uncured default. This means the franchisee can only seek compensation for losses that are a direct and unavoidable result of the subfranchisor's failure to meet their obligations, provided they gave notice and the subfranchisor failed to cure the issue.
This clause protects the franchisee by allowing them to end the agreement if the subfranchisor is not fulfilling their obligations. However, it also limits the franchisee's ability to recover extensive damages, focusing instead on direct losses resulting from the subfranchisor's breach. Prospective franchisees should carefully consider this limitation and potentially seek legal advice to understand their rights and remedies in case of a subfranchisor default.