Under what conditions can Management Recruiters terminate a franchise prior to its expiration?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
e (5) days after such levy;
- Franchisee, or any of its Principals, shareholders, members, officers, directors, or partners is convicted of, or pleads guilty or no contest to, any crime punishable as a felony or involving moral turpitude or immoral conduct;
- Franchisee attempts to transfer the Franchise Business or make an assignment of this Agreement in violation of Section 13 of the Franchise Agreement;
- in the event of death or incapacity, the surviving spouse, heirs, beneficiaries, devisees, or legal representatives fail to comply with the provisions of Section 13.7;
- Franchisee discloses, attempts to disclose, or threatens to disclose any of the Trade Secrets in violation of this Agreement;
- Franchisee willfully and knowingly employs temporary employees in classifications of business which are specifically prohibited by Franchisor or otherwise does not adhere to the risk management policies of Franchisor;
- Franchisee fails to disclose to Franchisor the existence of a non-compete restriction applicable to Franchisee; or
- Franchisee or, if applicable, its Principals, shareholders, members, officers, directors, or partners, directly or indirectly, engage in or perform services for or hold an ownership interest in any business engaged in the temporary staffing of skilled and/or unskilled personnel (including, without limitation, clerical, computer, technical, accounting, and medical), employee leasing or related enterprise, other than Franchisor or its Affiliates or its franchisees.
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- If we conduct an audit on the Franchised Business and you are found to have underreported revenue, you must make payment of any unpaid royalty and MPRF as well as the costs of the audit which will not be less than $1,000.00. If no underreporting is found, you will not be responsible for any fees.
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- We may be required to take steps and incur costs to collect money due for services provided to your clients.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, there are several conditions under which Management Recruiters can terminate a franchise agreement before its term expires. These include specific actions or failures on the part of the franchisee or its related parties.
The franchise agreement can be terminated if the franchisee or any of its principals, shareholders, members, officers, directors, or partners is convicted of, or pleads guilty or no contest to, any crime punishable as a felony or involving moral turpitude or immoral conduct. Termination can also occur if the franchisee attempts to transfer the franchise business or assign the agreement in violation of the agreement's Section 13. In the event of death or incapacity, failure of the surviving spouse, heirs, beneficiaries, devisees, or legal representatives to comply with Section 13.7 can also lead to termination.
Further grounds for termination include disclosing or threatening to disclose trade secrets, willfully employing temporary employees in prohibited classifications, failing to disclose a non-compete restriction, or engaging in or holding an ownership interest in a business engaged in temporary staffing (other than with Management Recruiters). Additionally, the FDD states that in Michigan, a franchise can be terminated prior to its expiration if the franchisee fails to comply with any lawful provisions of the Franchise Agreement and fails to cure such failure after being given written notice and a reasonable opportunity to cure, which need not be more than 30 days.