What section of the Exit agreement describes the termination process?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
16. TERMINATION BY SUBFRANCHISOR
16.1. Events of Default
(A) Right to Cure. Set forth below are events of default which, upon their occurrence, shall give Subfranchisor the right to terminate this Agreement after notice to Franchisee and a right to cure as described in Section 16.2:
- (i) Franchisee, or any entity 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.
(iii) Franchisee, directly or indirectly, sells, leases, assigns, transfers, conveys, gives away, pledges, mortgages or encumbers any interest in this Agreement, or in any way removes the franchise granted by this Agreement from the actual or legal supervision or control of Franchisee, or attempts to do any of same without the prior written consent of Subfranchisor; or if Franchisee is a corporation a partnership or other legal entity, if any interest in the entity is assigned or transferred without the prior written consent of the Subfranchisor.
(iv) Franchisee, or any entity controlled by Franchisee or by one or more of the equity holders of Franchisee, breaches any requirement, obligation, term, or condition of any other EXIT franchise agreement between Franchisee, or any entity controlled by Franchisee or by one or more of the equity holders of Franchisee, and Franchisor or any EXIT subfranchisor.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Section 16 outlines the termination process by the subfranchisor. Specifically, Section 16.1 details the 'Events of Default' that allow the subfranchisor to terminate the agreement, provided that notice is given to the franchisee along with an opportunity to address and resolve the issue as described in Section 16.2.
These events of default include failure to meet financial obligations to Exit, the subfranchisor, other Exit subfranchisors, or the Brokers' Council, including payments due under any promissory note. It also covers breaches of any term within the Franchise Agreement, any other agreement granting an Exit franchise, or any rule, procedure, amendment, or supplement established by Exit or the subfranchisor, including the Performance Standards provisions outlined in Section 9.8 of the agreement.
Further events that could lead to termination include the franchisee directly or indirectly transferring any interest in the agreement without prior written consent from the subfranchisor, or if the franchisee is a corporation, partnership, or other legal entity, any interest in the entity is assigned or transferred without the subfranchisor's consent. Additionally, breaching any requirement, obligation, term, or condition of any other Exit franchise agreement between the franchisee and Exit or any Exit subfranchisor can also result in termination.