What are the conditions under which Ledgers may terminate the Franchise Agreement, considering the franchisee's obligations listed in Item 9 and the litigation described in Item 3?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section In Franchise Agreement | Summary |
|---|---|---|
| a. Length of the franchise term b. Renewal or extension of the term | 1.2.A 1.2.B | 10 years. Can be renewed for successive terms if you are in compliance with your Franchise Agreement ("Agreement"). |
| c. Requirements for you to renew or extend | 1.2.B | Renewing your Franchise Agreement means that you are able to continue your operations as a franchisee for an additional term. You must sign a general release of claims, notify us in writing at least 90 days before the expiration of the Agreement, and sign our then current Agreement, which may not contain materially different terms and conditions than your original contract. |
| d. Termination by franchisee | 7.2 | You may terminate the Agreement if you sell the franchise pursuant to the terms of the Franchise Agreement, do not renew, or under any grounds permitted by applicable state law. |
| e. Termination by franchisor | None | Not applicable |
| without cause | ||
| f. Termination by franchisor | 8.2., 8.3 | We can terminate only if you default. |
| with cause | ||
| g. "Cause" defined – curable defaults | 8.3 | Violate the Agreement, Manual, any other agreement with us, or owe monies to us more than 30 days past due, and do not cure such breach within 30 days after notice. |
| h. "Cause" defined – non curable defaults | 8.2 | Do not pass Initial Training, fail to obtain our approval of a site or open on time, become insolvent, commit a material violation of law, abandon the Franchised Business, subm |
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, Ledgers can terminate the franchise agreement only if the franchisee defaults. The grounds for default are divided into curable and non-curable defaults.
Curable defaults include violating the Franchise Agreement, the Operations Manual, or any other agreement with Ledgers, or owing monies to Ledgers more than 30 days past due. In these cases, Ledgers must provide the franchisee with a notice of default, and the franchisee has 30 days to cure the breach after receiving the notice. If the franchisee cures the default within the 30-day period, Ledgers cannot terminate the agreement.
Non-curable defaults, which allow Ledgers to terminate the agreement immediately without an opportunity to cure, include failing to pass Initial Training, failing to obtain Ledgers' approval of a site or open on time, becoming insolvent, committing a material violation of law, abandoning the Franchised Business, submitting a materially false Franchise Application, committing fraud, an uncured default of another agreement, failing to pay suppliers an amount exceeding $3,000 for more than 60 days, failing to permit Ledgers to inspect or audit the franchise, or committing three or more breaches within 12 months. Item 9 discusses dispute resolution by arbitration or mediation, but does not affect Ledgers' ability to terminate the agreement based on franchisee default.