What section of the Fitstop franchise agreement defines 'cause' for termination related to non-curable defaults?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| d. Termination by franchisee | N/A | No early termination by you. | |--------------------------------------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | e. Termination by franchisor without cause | N/A | No termination by us without cause. | | f. Termination by franchisor with cause | Section 16.1 | Franchisor can terminate if you are in breach of any term of the Franchise Agreement, if you are in default, if you fail to satisfactorily complete the Training, or if you fail to locate a Premises in the specified period of time. | | g. "Cause" defined—curable defaults | Section 16.2 | We can terminate you for engaging in conduct that reflects unfavorably on the operation and reputation of the Franchise System and if you fail to cure such default within 24 hours of our notice to you. The following defaults, if not cured within 30 calendar days after we have given you written notice, may result in termination: failure to comply with any provisions of the Franchise Agreement or other agreement between us and you; failure to pay any monies due us or suppliers when due; entering into a contract with or take payment directly from a customer without our approval; failing to submit required financial information to us or a government entity or making false statements about your financial statements to us or a government entity; failing to pay all taxes and employee related withholdings relating to the operation of your franchise; failing to keep your business entity active and in good |
| h. "Cause" defined—non-curable defaults | Section 16.1 | Non-curable defaults include being convicted of, pleading guilty or no contest to, or receiving deferred adjudication for a felony, crime of moral turpitude, or certain other crimes; attempts to hack or crack our computer software; disclosure of confidential information; abandonment; unauthorized transfer; material misrepresentations when you purchase the franchise; repeated failure to comply with Franchise Agreement or Manual requirements, even if corrected; or if you are declared insolvent or bankrupt.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Section 16.1 of the franchise agreement defines 'cause' for termination related to non-curable defaults. This section outlines specific actions or events that Fitstop considers severe enough to warrant immediate termination of the franchise agreement without an opportunity for the franchisee to correct the issue.
These non-curable defaults include serious offenses such as being convicted of a felony or a crime of moral turpitude, attempting to hack Fitstop's computer software, disclosing confidential information, abandoning the franchise, or making unauthorized transfers of the franchise. Additionally, material misrepresentations made during the purchase of the franchise, repeated failures to comply with the Franchise Agreement or Manual requirements (even if corrected), and being declared insolvent or bankrupt are also considered non-curable defaults.
For a prospective Fitstop franchisee, this means understanding that certain actions can lead to immediate termination of the franchise agreement. It is crucial to avoid these actions to maintain the franchise agreement and prevent termination. Franchisees should pay close attention to what constitutes a non-curable default and ensure they operate their business within the bounds of the agreement to avoid such pitfalls.