Is failure to pay obligations to affiliates a cause for termination of a Lees Famous Recipe franchise?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise agreement | Summary | |
|---|---|---|---|
| c. | Requirements for franchisee to renew or extend | 3 | Provide advance notice, not be in default within the 24 months preceding the expiration of the initial term, comply with current Franchise Agreement, satisfactorily complete any new/refresher training programs, sign a new agreement (which may contain materially different terms and conditions than your original Franchise Agreement), remodel, provide proof you will maintain possession of the Restaurant premises and remodel the Restaurant as necessary to comply with our then-current standards and specifications, pay a renewal fee, and sign a general release of claims. |
| d. | Termination by franchisee | None | Not applicable. |
| e. | Termination by franchisor without cause | None | Not applicable. |
| f. | Termination by franchisor with | 15(A) through | We may terminate the Franchise Agreement only if |
| cause | (C) | you default. | |
| g. | "Cause" defined – curable defaults | 15(C) | Failure to conform to the material requirements of the System or the material standards as described in the Operations Manual or as we have established under the System; failure to timely pay any obligations or liabilities due and owing to us or our affiliates; violation of any material provision or obligation of the Franchise Agreement; and other breaches The cure period is generally 30 days |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 54–59)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, failure to pay obligations to affiliates can be a cause for termination of the franchise agreement. Specifically, if a franchisee fails to timely pay any obligations or liabilities due and owing to Lees Famous Recipe or its affiliates, it is considered a curable default. This means Lees Famous Recipe can terminate the Franchise Agreement if the franchisee defaults on these payments.
The FDD states that the cure period for such defaults is generally 30 days. Therefore, if a franchisee fails to pay obligations to Lees Famous Recipe or its affiliates, they typically have 30 days to rectify the situation. If the franchisee does not cure the default within this period, Lees Famous Recipe has the right to terminate the franchise agreement.
This provision is important for prospective franchisees to understand, as it highlights the financial obligations they have not only to Lees Famous Recipe but also to its affiliates. Failing to meet these obligations in a timely manner can have serious consequences, including the termination of their franchise agreement. Franchisees should ensure they have a clear understanding of all payment obligations and maintain sufficient financial resources to meet them to avoid potential default and termination.