Under what circumstances can Lees Famous Recipe terminate the Development Agreement without allowing an opportunity to cure?
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 FDD, Lees Famous Recipe has the right to terminate the Development Agreement immediately, without providing an opportunity to cure, under specific circumstances. These circumstances include if the franchisee: ceases active development activities in the Development Area for three consecutive months, becomes insolvent or bankrupt, attempts to transfer the franchise or any interest in the agreement in violation of Section 6, or if the franchisee or any Principal Owners violate the non-compete provisions outlined in Section 13 of the agreement.
These termination rights are significant for a prospective Lees Famous Recipe franchisee because they highlight the importance of maintaining continuous development efforts and financial stability. Failure to actively develop the area or facing financial distress can lead to immediate termination of the agreement. Additionally, any attempt to transfer the franchise without proper authorization or violating the non-compete terms can also result in immediate termination.
It is important to note that Lees Famous Recipe also has the right to terminate the agreement if any Franchise Agreement that is entered into in order to fulfill the development obligations under this Agreement is terminated or subject to termination by them, pursuant to the terms of that Franchise Agreement. Furthermore, if the franchisee breaches any other term of this Agreement, Lees Famous Recipe can terminate the agreement if the breach is not cured within thirty (30) days of receiving notice. This indicates that while some breaches allow for a cure period, the specified events warrant immediate termination to protect the brand and the integrity of the franchise system.
Prospective franchisees should carefully review these termination conditions and ensure they have the resources and commitment to meet the development obligations and maintain compliance with all terms of the Development Agreement. Understanding these conditions is crucial for assessing the risks and responsibilities associated with the Lees Famous Recipe franchise opportunity.