Under what conditions can Expense Reduction Analysts terminate a franchise prior to its expiration?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the Franchise Agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
ADDENDUM TO EXPENSE REDUCTION ANALYSTS, INC. REGIONAL FRANCHISE DISCLOSURE DOCUMENT AND FRANCHISE AGREEMENT FOR THE STATE OF CALIFORNIA
The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
With respect to franchises governed by Minnesota law, the franchisor will comply with Minn. Stat. Sec. 80C.14, Subds. 3, 4, and 5 which require, except in certain specified cases, that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice of non-renewal of the Franchise Agreement and that consent to the transfer of the franchise will not be unreasonably withheld.
Under South Dakota law, termination provisions covering breach of the Franchise Agreement, failure to meet performance and quality standards, and failure to make management service fee payments contained in the Disclosure Document and Franchise Agreement must afford a franchisee thirty (30) days written notice with an opportunity to cure the default prior to termination.
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement or other agreements does not constitute "reasonable cause" as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (REGIONAL FRANCHISEES) (FDD pages 52–57)
What This Means (2025 FDD)
According to the 2025 Expense Reduction Analysts FDD, the conditions under which Expense Reduction Analysts can terminate a franchise prior to its expiration are subject to state laws that may modify the franchise agreement. For instance, in California, the Franchise Agreement provides for termination upon bankruptcy, but this provision may not be enforceable under federal bankruptcy law.
In Minnesota, state statutes require Expense Reduction Analysts to provide a franchisee with 90 days' notice of termination, with 60 days to cure the issue, except in certain specified cases. Similarly, in South Dakota, termination provisions related to breach of the Franchise Agreement, failure to meet performance and quality standards, and failure to make management service fee payments require Expense Reduction Analysts to provide the franchisee with 30 days written notice and an opportunity to cure the default before termination.
In Virginia, it is unlawful for Expense Reduction Analysts to cancel a franchise without reasonable cause, and any grounds for default or termination stated in the Franchise Agreement that do not constitute "reasonable cause" under Virginia law may not be enforceable. Additionally, in general, a provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause is void. Good cause includes the failure of the franchisee to comply with any lawful provision of the Franchise Agreement and failure to cure after written notice and a reasonable opportunity to cure, which need not be more than 30 days.