How long can a Lees Famous Recipe developer cease development activities before Lees Famous Recipe can terminate the agreement?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
We will have the right, at our option, to terminate this Agreement and all rights granted to you hereunder, without affording you any opportunity to cure such default, effective upon written notice to you, upon the occurrence of any of the following events: (i) if you cease to actively engage in development activities in the Development Area or otherwise abandon your development business for three (3) consecutive months, or any shorter period that indicates an objective intent by you to discontinue development of the Restaurants within the Development Area; (ii) if you become insolvent or are adjudicated bankrupt, or if you take any action, or if any action is taken by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit of creditors or a receiver is appointed for you; (iii) if you purport to sell, transfer or otherwise dispose of your franchise entity or any interest in this Agreement, your business, or you are in violation of Section 6 hereof; (iv) if you fail to meet your development obligations under the Development Schedule for any single Development Period, and fail to cure such default within thirty (30) days of receiving notice thereof; (v) you or any Principal Owners violate the non-compete provisions set forth in Section 13 of this Agreement; (vi) if any Franchise Agreement that is entered into in order to fulfill your development obligations under this Agreement is terminated or subject to termination by us, pursuant to the terms of that Franchise Agreement; or (vii) you are in breach of any other term of this Agreement, and fail to cure such breach within thirty (30) days of receiving notice thereof.
Source: Item 23 — RECEIPTS (FDD pages 70–287)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe Franchise Disclosure Document, Lees Famous Recipe has the right to terminate the Development Agreement if the developer ceases to actively engage in development activities in the Development Area or otherwise abandons their development business for three consecutive months. Lees Famous Recipe can also terminate the agreement for any shorter period that indicates an objective intent by the developer to discontinue development of the Restaurants within the Development Area. This termination is effective upon written notice to the developer, without affording any opportunity to cure the default.
This clause is significant for prospective developers as it sets a clear expectation for continuous engagement in development activities. A developer cannot simply secure a Development Area and then delay development indefinitely. Lees Famous Recipe retains the right to ensure that the brand expands according to its strategic objectives. The "objective intent" clause also gives Lees Famous Recipe some latitude to act if a developer's actions, even within a shorter timeframe than three months, suggest they are no longer committed to the development schedule.
Many franchise agreements include development schedules and termination clauses related to development activity. This is a fairly standard practice to ensure that franchisees fulfill their obligations to expand the brand's presence. However, the specific terms, such as the length of the grace period and the conditions for termination, can vary. Prospective Lees Famous Recipe developers should carefully consider their ability to meet the development schedule and maintain continuous engagement to avoid potential termination of the agreement.
It is important for prospective developers to discuss the development schedule and these termination clauses with Lees Famous Recipe during their due diligence. Understanding the franchisor's expectations and demonstrating a clear plan for meeting those expectations can help ensure a successful and long-term relationship. Developers should also assess their own financial and operational capabilities to ensure they can meet the demands of the development schedule.