If Mr. Sandless exercises its Step-In Rights, can Mr. Sandless also terminate the Franchise Agreement?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
We shall keep in a separate account all monies generated by the operation of your Business, less the expenses of the Business, including reasonable compensation and expenses for our representatives. In the event of our exercise of the Step-In Rights**,** you agree to hold harmless us and our representatives for all actions occurring during the course of such temporary operation. You agree to pay all of our reasonable attorneys' fees and costs incurred as a consequence of our exercise of the Step-In Rights. Nothing contained herein shall prevent us from exercising any other right which we may have under this Agreement, including, without limitation, termination.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, the company retains the right to pursue termination of the Franchise Agreement even if it exercises its Step-In Rights. This means that Mr. Sandless taking over operations temporarily does not prevent them from also ending the franchise agreement entirely.
This provision has significant implications for a franchisee. Even if Mr. Sandless steps in to manage the business temporarily, the franchisee is not protected from potential termination. The franchisee remains responsible for all of Mr. Sandless's legal fees and costs incurred during the period of the Step-In Rights.
This clause underscores the importance of adhering to the franchise agreement. Franchisees should be aware that Mr. Sandless can take control of the business and still pursue termination, potentially leading to a loss of the franchise and further financial obligations.