What specific action must the Exit Subfranchisor take to demand cure of an Event of Default?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
(A) (i) Upon the occurrence of any of the Events of Default described in Section 16.1(A) (except Section 16.1(A)(i)), Subfranchisor may terminate and cancel this Agreement upon thirty (30) days' prior written notice to Franchisee.
The notice shall demand immediate cure of the Event(s) of Default and shall advise Franchisee that if the Event of Default specified in the notice is not cured within thirty (30) days after the date of the notice, all rights of Franchisee under this Agreement shall be cancelled and terminated without further notice.
- (ii) Upon the occurrence of an Event of Default described in Section 16.1(A)(i), Subfranchisor may terminate and cancel this Agreement upon thirty (30) days' prior written notice to Franchisee.
The notice shall demand immediate cure of the Event of Default and advise Franchisee that if the Event of Default specified in the notice is not cured within ten (10) days, all rights of Franchisee under this Agreement shall be cancelled and terminated without further notice 30 days from the date of the default notice.
- (iii) Upon the occurrence of any of the Events of Default described in Section 16.1(B), or upon the occurrence of any default that cannot be cured, Subfranchisor may terminate and cancel this Agreement, without providing Franchisee any opportunity to cure, effective immediately upon notice to Franchisee.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the specific action the Subfranchisor must take to demand cure of an Event of Default depends on the nature of the default. For most events of default, as described in Section 16.1(A) of the agreement (excluding defaults related to financial obligations), the Subfranchisor must provide the Franchisee with thirty (30) days prior written notice to terminate the agreement. This notice must demand immediate cure of the default and inform the Franchisee that their rights under the agreement will be cancelled if the default is not cured within that 30-day period.
However, if the Event of Default involves the Franchisee's failure to meet financial obligations to Exit, the Subfranchisor, other Exit subfranchisors, or the Brokers' Council, the procedure is slightly different. In this case, the Subfranchisor must still provide thirty (30) days prior written notice to the Franchisee to terminate the agreement. However, the Franchisee only has ten (10) days to cure the default from the date of the notice. The notice must demand immediate cure of the Event of Default and advise the franchisee that if the Event of Default specified in the notice is not cured within ten (10) days, all rights of Franchisee under this Agreement shall be cancelled and terminated without further notice 30 days from the date of the default notice.
In certain situations, such as those described in Section 16.1(B) or defaults that cannot be cured, the Subfranchisor has the right to terminate the agreement immediately upon notice to the Franchisee, without providing any opportunity to cure the default. It is important for a prospective Exit franchisee to understand these different cure periods and the specific events that trigger them, as failure to comply with the cure requirements can lead to termination of the franchise agreement.