What is the Gokhale Method franchisee's obligation to cure a default to the franchisor's satisfaction?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.1. Automatic Termination. You shall be deemed to be in default under this Agreement, and all rights granted to you herein shall automatically terminate without notice to you or opportunity to cure, if one or more of the following occur: You become insolvent or make a general assignment for the benefit of creditors; a petition in bankruptcy is filed by you or such a petition is filed against and not opposed by you; you are adjudicated bankrupt or insolvent; a bill in equity or other proceeding for the appointment of a receiver of you or other custodian for your business or assets is filed and consented to by you; a receiver or other custodian (permanent or temporary) of your assets or property, or any part thereof, is appointed by any court of competent jurisdiction; proceedings for a composition with creditors under any state or federal law should be instituted by or against you; a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedes bond is filed); you are dissolved; you die or are declared incompetent; execution is levied against your business or property; suit to foreclose any lien or mortgage against the Location or equipment is instituted against you and not dismissed within thirty (30) days; you attempt to transfer this Franchise Agreement or more than half the assets of the Franchised Business; you delegate teaching of the Gokhale System without our prior written consent; or the real or personal property of the Franchised Business shall be sold after levy thereupon by any sheriff, marshal, or constable.
- 15.2. Notice Without Opportunity to Cure. Additionally, upon the occurrence of any of the following events of default, we may, at our option, terminate this Agreement and all rights granted hereunder, without affording you any opportunity to cure, effective immediately upon notice to you:
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, a franchisee may face automatic termination without notice or opportunity to cure certain defaults. These defaults include insolvency, assignment for the benefit of creditors, bankruptcy filings (by or against the franchisee if unopposed), adjudication of bankruptcy or insolvency, equity proceedings for a receiver, appointment of a custodian for the business, proceedings for composition with creditors, an unsatisfied final judgment for 30 days or longer, dissolution, death or incompetence, execution levied against the business, foreclosure suits not dismissed within 30 days, attempts to transfer the Franchise Agreement or more than half the business assets, unauthorized delegation of teaching, or sale of business property after levy.
Additionally, Gokhale Method may terminate the Franchise Agreement immediately upon notice without any opportunity for the franchisee to cure if other events of default occur. The FDD excerpt does not specify what these other events of default are.
It is important for a prospective Gokhale Method franchisee to understand the specific conditions under which they would automatically forfeit their franchise rights versus situations where they might have an opportunity to correct the issue. A potential franchisee should ask Gokhale Method for a comprehensive list of all default scenarios and the specific cure periods, if any, associated with each.