If a Management Recruiters franchise agreement is terminated for default before the expiration date, is the franchisee responsible for the Minimum Annual Continuing Fee (MACF)?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5.5.3.MACF Upon Termination. In the event of termination of this Agreement for default, prior to the Expiration Date, Franchisee shall be responsible for payment of the MACF for the remaining term of this Agreement, unless otherwise waived by Franchisor in writing.
"Minimum Annual Continuing Fee" or "MACF" means twelve thousand dollars ($12,000.00) per calendar year.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, if the franchise agreement is terminated for default before the expiration date, the franchisee is generally responsible for paying the Minimum Annual Continuing Fee (MACF) for the remaining term of the agreement. The MACF is applicable each calendar year, starting from the first full calendar year after the agreement's effective date and continuing through the expiration date. The FDD specifies that the MACF is $12,000 per calendar year.
However, there is a possibility that Management Recruiters may waive this requirement in writing. This waiver provides a potential avenue for franchisees facing termination to negotiate relief from the financial obligation of the MACF.
In practical terms, this means that a franchisee who defaults on their agreement could face a significant financial burden, potentially owing Management Recruiters $12,000 for each remaining year of the franchise term, unless a written waiver is obtained. This highlights the importance of adhering to the franchise agreement terms and seeking legal counsel if facing potential default or termination.