What is the standard cure period for defaults under the Lees Famous Recipe Franchise Agreement?
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 |
| 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, the standard cure period for defaults is generally 30 days. Specifically, if a franchisee fails to conform to the material requirements of the System, fails to meet material standards described in the Operations Manual, fails to pay obligations, or violates any material provision of the Franchise Agreement, they typically have 30 days to correct the issue.
However, the FDD also outlines several non-curable defaults, meaning they cannot be remedied with a cure period. These include situations like insolvency, bankruptcy, assignment for the benefit of creditors, failure to commence operations on time, conviction of a felony, violation of non-competition or nondisclosure agreements, repeated defaults (3 in 12 months), failure to correct legal or regulatory compliance 30 days after notice from an authority, submission of false information, failure to allow inspection, abandonment, and unapproved transfers or assignments.
The distinction between curable and non-curable defaults is critical for prospective Lees Famous Recipe franchisees. Understanding which actions can be corrected within 30 days and which will lead to immediate termination is essential for managing the franchise and maintaining a good standing with the franchisor. Franchisees should pay close attention to the Operations Manual and Franchise Agreement to fully understand their obligations and the potential consequences of non-compliance.