Under what conditions related to operating the franchise does an Exit franchisee NOT have a right to cure?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
- (B) No 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 with no right to cure, as described in Section 16.2:
(i) Franchisee fails to open its EXIT office and commence business operations within one hundred and twenty (120) days of the date of this Agreement.
(ii) Franchisee voluntarily abandons the franchise by failing to operate the franchise in accordance with the terms of this Agreement, within the Protected Territory for a period of ten (10) consecutive days, or for twenty (20) days in any period of thirty (30) consecutive days, unless such failure is due to fire, flood, earthquake or similar cause beyond Franchisee's control.
(iii) Franchisee fails to comply with the provisions of this Agreement three (3) or more times, whether or not corrected after notice.
(iv) Franchisee or any of its equity holders, directors or officers are convicted of a felony or other crime that, in the reasonable judgment of Subfranchisor, impairs the goodwill associated with the Proprietary Marks.
(v) The filing of a voluntary or involuntary petition under any bankruptcy or insolvency law or a petition for the appointment of a receiver, or an assignment for the benefit of creditors, if Franchisee or a guarantor of this Agreement is subject to the action.
(vi) Franchisee or a guarantor of this Agreement dies or becomes Permanently Disabled, or if Franchisee or a guarantor is a corporation, limited liability company or other entity other than an individual, such Franchise or guarantor dissolves.
(vii) Misuse of escrow or trust funds by Franchisee.
(viii) Violation of the In-Term Covenant Not To Compete provisions described in Section 21.1 of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, there are several specific conditions under which a franchisee does not have the right to cure a default, meaning the subfranchisor can terminate the agreement after notice without giving the franchisee an opportunity to correct the issue. These conditions relate to critical aspects of operating the Exit business and maintaining its integrity.
One such condition is failing to open the Exit office and commence business operations within 120 days of the franchise agreement date. Another is voluntarily abandoning the franchise by failing to operate within the protected territory for a specified period: 10 consecutive days or 20 days within any 30-day period, unless due to events beyond the franchisee's control like natural disasters. Repeated non-compliance with the franchise agreement, even if corrected after notice, can also lead to termination without a right to cure if it occurs three or more times.
Furthermore, certain actions by the franchisee or its stakeholders can trigger termination without a cure period. These include a felony conviction of the franchisee, equity holders, directors, or officers that impairs the goodwill associated with Exit's proprietary marks, as well as events related to bankruptcy, insolvency, or the death or permanent disability of the franchisee or a guarantor. Misuse of escrow or trust funds and violation of the in-term covenant not to compete are also grounds for termination without the possibility of a cure. These no-cure provisions highlight the importance of adhering to the franchise agreement and maintaining ethical and legal business practices to avoid immediate termination of the Exit franchise.