Under what conditions can either party terminate the Management Recruiters contract?

According to the 2024 Management Recruiters FDD, either party, whether it be Management Recruiters or the franchisee, has the option to terminate the franchise agreement by providing a written notice 30 days in advance. In addition to this general termination clause, the FDD outlines specific conditions and procedures for franchisees seeking to terminate the agreement early through a 'Buy-Out Termination.'

Specifically, starting January 1 of the last full calendar year of the initial term, a franchisee can terminate the agreement, and Management Recruiters will waive competitive restrictions under certain financial conditions. The franchisee must provide written notice six months before the proposed buy-out date. They also need to pay Management Recruiters a buy-out price equivalent to 15% of the franchise's gross funds from the previous 12 calendar months. This notice must include a cash deposit of one-third of the total buy-out amount and a promissory note for the remaining balance, following Management Recruiters' prescribed terms and standard mutual termination agreement.

If the franchisee fails to complete the buy-out after sending the notice, Management Recruiters has two options: they can retain 50% of the initial deposit as liquidated damages while keeping the agreement in force, or they can purchase the franchise business. If Management Recruiters chooses to purchase the business, they will pay the franchisee an amount equal to the net book value of the tangible assets, calculated using straight-line depreciation, and will retain the deposit while returning the promissory note.