Under what circumstances related to financial obligations does an Exit franchisee have a right to cure a default?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
e 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.
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;
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, an Exit franchisee has a right to cure a default related to financial obligations. Specifically, if the franchisee, or any entity controlled by the franchisee or its equity holders, fails to pay any financial obligations when due to Exit, the subfranchisor, other Exit subfranchisors, or the Brokers' Council, including payments due under any promissory note, the franchisee has the right to cure the default.
In the event of such a financial default, the subfranchisor must provide the franchisee with a written notice of termination, which includes a demand for immediate cure of the default. The franchisee then has ten days from the date of the notice to cure the financial default. If the franchisee cures the default within this ten-day period, the termination notice is rescinded, and the franchise agreement remains in effect.
However, if the franchisee fails to cure the financial default within the ten-day cure period, all rights of the franchisee under the agreement will be canceled and terminated without further notice 30 days from the date of the default notice. This means that the subfranchisor can proceed with terminating the franchise agreement, and the franchisee will lose their rights to operate the Exit franchise. This cure period is shorter than the standard 30-day cure period for other types of defaults under the Exit franchise agreement.