What are the consequences if a Jersey Mikes franchisee fails to diligently perform their obligations?

default has been received by Franchisor shall be deemed a termination by Franchisee without cause.

• 17.2 This Agreement shall terminate automatically upon delivery of notice of termination to Franchisee, if Franchisee or its owners(s), officer(s), or key employee(s):
  • a. Fails to decorate and e quip (specifically including mandatory upgrades of the Premises) the Premises as provided in Section 4 of this Agreement, or fails to satisfactorily complete the training program as provided in Section 5 of this Agreement;
  • b. Has made any material misrepresentation or omission in its application for the franchise;
  • c. Is convicted of or pleads no contest to a felony or to any other crime or offense that is likely to adversely affect the re putation of Franchisor, Franchisee or the JERSEY MIKE'S System;
  • d. Makes any unauthorized use, disclosure or duplication of any portion of the Manual or duplicates or discloses or make s any una uthorized use of a ny trade secret or confidential information provided to Franchisee by Franchisor;
  • e. Abandons or fails or refuses to actively operate the Franchised Restaurant for two (2) days in any twelve (12) month period, unless the Franchised Restaurant has been closed for a purpose approved by Franchisor, or fails to relocate to approved Premises within an approved period of time following expiration or termination of the lease for the Premises;
  • f. Surrenders or transfers Control (defined in Section 31) of the operation of the JERSEY MIKE'S Franchised Restaurant, makes an un authorized direct or indirect Transfer (defined in Section 31) or fails or refuses to assign t he franchise or the intere st in Franchisee of a deceased or disabled Controll ing Principal as re quired by this Agreement;
  • g. Submits to Franchisor on two (2) or more separate occasions at any time during the term of the franchise any reports or other data, information or supporting records which understate by more tha n three percent (3%) the Cont inuing Royalty Fe es for any weekly period and F ranchisee is unable to demonstrate to Franchisor's satisfaction within seven (7) days that such understatements resulted from inadvertent error;
  • h. Acknowledges that Franchisee is unable to pay its debts as they come due or commits any other affirmative act of insolvency, or files any petition or action of insolvency, or for appointment of a receiver or trustee, files a petition in bankruptcy or makes any assignment for the benefit of creditors, or fails to vacate or dismiss within sixty (60) days after filing any such proceedings commenced against Franchisee by a third party;
  • i. Is subject to a dismissal of a liquidation proceeding according to 11 U.S.C. Section 707, dismissal of a reorganization proceeding according to 11 U .S.C. Section 1112, revocation of an orde r of c onfirmation according to 11 U. S.C. Section 1330(b) or dismissal of a debt adjustment proceeding according to 11 U.S.C. Section 1307;

• j. Materially misuses or makes an unauthorized use of any Marks and fails to correct such misuse or unauthorized use w ithin seven (7) d ays of r eceiving notice from Franchisor;
• k. Commits any act which can reasonably be expected to materially impair the goodwill associated with any Marks;
• l. Fails on t wo (2) or more separate occasions within any pe riod of twe lve (12) consecutive months to submit when due reports or other information or supporting records, to pa y when due the Continuing Royalty Fees, advertising contributions, amounts due for purchases from Franchisor and its Affiliates or other payments due to Franchisor and its Affiliates, or otherwise fails to comply with this Agreement, whether or not s uch failures to c omply are corrected after notice of de fault is deliver ed to Franchisee;
• m. Continues to violate any health, safety or sanitation law, ordinance or regulation or operates the Franchised Restaurant in a manner that presents a health or safety hazard to its customers or the public after receiving notice of such violation;
• n. Fails to timely pay federal, state, county, local or foreign taxes which are due and payable;
• o. Fails to timely pay vendors and suppliers used in connection with the Franchised Restaurant;
• p. Fails to timely pay JMFS in the event Franchisee enters into a promissory note with JMFS to borrow funds to be used in connection with the Franchised Restaurant;
• q. Fails to open the Franchised Restaurant and commence business, with Franchisor's approval, by the Opening Deadline;
• r. Fails on three (3) or more separate occasions within any twelve (12) consecutive month period to comply with this Agreement, whether or not Franchisor notifies Franchisee of the failures, and, if Franchisor does notify Franchisee of the failures, whether or not Franchisee corrects the failures after Franchisor's delivery of notice to Franchisee; or
• s. Fails on two (2) or more separate occasions within any twelve (12) consecutive month period to comply with the same obligation under this Agreement, whether or not Franchisor notifies Franchisee of the failures, and, if Franchisor does notify Franchisee of the failures, whether or not Franch isee corrects the failures after Franchisor's delivery of notice to Franchisee.
• 17.3 This Agreement shall terminate without further action by Franchisor or notice to Franchisee if Franchisee or Franchisee's owner:
  • a.

Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED RESTAURANT (FDD page 56)