Can a Lees Famous Recipe franchisee terminate the Franchise Agreement?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | 3 | Term is 15 years. |
| b. | Renewal or extension of the term | 3 | If you are in good standing, you may renew for an additional 15-year term. |
| 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 |
| h. | "Cause" defined – non-curable defaults | 15(A) through (B) | Non-curable defaults include: Insolvency; bankruptcy, assignment for the benefit of creditors; receivership, attachment not released in 30 days; termination of right to occupy the premises; failure to commence operations on time; conviction of felony or similar event; violation of the non-competition or nondisclosure covenants; repeated defaults (3 in 12 months, even if cured); failure to correct legal or regulatory compliance 30 days after notice from authority; submission of false information, failure to allow inspection; if the continued operation of your Restaurant will result in danger to public health or safety; abandonment; unapproved transfers or assignments; failure to maintain ACH capability; failure to restore operations within 365 days after loss of possession by either condemnation or casualty; if during the Term no Guarantor satisfies the Guarantor Net Worth requirement. |
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, a franchisee cannot terminate the Franchise Agreement. Item 17 clarifies the conditions under which either the franchisee or Lees Famous Recipe can terminate the agreement. Specifically, under the section "Termination by franchisee," the FDD states "None. Not applicable." This means that the franchise agreement does not provide any clauses that allow the franchisee to unilaterally terminate the agreement.
This lack of a termination clause initiated by the franchisee is an important consideration for potential franchisees. Typically, franchise agreements are binding for a fixed term, and early termination can result in significant penalties or legal ramifications. The absence of a termination clause initiated by the franchisee means that once the agreement is signed, the franchisee is committed for the entire term, which is 15 years, unless Lees Famous Recipe breaches the agreement or allows for termination under specific circumstances.
While the franchisee cannot terminate the agreement, Lees Famous Recipe can terminate the Franchise Agreement if the franchisee defaults. Defaults can be either curable or non-curable. Curable defaults include failure to conform to system standards, failure to pay obligations, or violation of any material provision of the Franchise Agreement, with a cure period of generally 30 days. Non-curable defaults include insolvency, bankruptcy, failure to commence operations on time, conviction of a felony, violation of non-competition or non-disclosure covenants, repeated defaults, failure to correct legal or regulatory compliance, submission of false information, failure to allow inspection, or abandonment.