What is the minimum written notice required for a franchisee to terminate the Exit Franchise Agreement due to Subfranchisor default?
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, a franchisee can terminate the Franchise Agreement if the Subfranchisor defaults. To do so, the franchisee must provide the subfranchisor with written notice at least thirty (30) days in advance of the termination date. The subfranchisor then has thirty (30) days after receiving the notice to correct the default.
However, the franchisee's ability to claim damages is limited. The franchisee waives the right to claim any damages except those that directly result from the subfranchisor's uncured default. This means the franchisee can only seek compensation for losses that are a direct and necessary consequence of the specific default mentioned in the termination notice.
This termination clause provides a degree of protection for Exit franchisees if the subfranchisor fails to meet their obligations under the agreement. However, the franchisee must adhere to the notice requirements and be aware of the limitations on the types of damages they can recover. It is important for prospective franchisees to understand these conditions and consider seeking legal counsel to fully understand their rights and obligations under the franchise agreement.