Does the Mrcool FDD outline any specific procedures for determining whether a franchisee or their affiliates are in default?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
hts in Franchisee without Franchisor's prior approval, written consent, and/or otherwise not in accordance with this Agreement;
- (j) Franchisee discloses, divulges, provides access to, communicates, and/or permits the communication of the contents, data and/or information contained in the Operations Manual to any third party not otherwise authorized by Franchisor;
- (k) Franchisee discloses, divulges, provides access to, communicates, and/or permits the communication of Confidential Information to any third party not otherwise authorized by Franchisor;
- (l) Franchisee engages in any activity that injures, harms, damages, or otherwise has a material adverse effect on Franchisor, the System, the Licensed Marks, MRCOOL Centers, Franchisee's Center, and/or the reputation of the MRCOOL brand;
- (m) Franchisee, an Owner, and/or a Spouse, as applicable and whether individually or jointly, breaches or is in default of an Ancillary Agreement, and, if the applicable agreement provides for the opportunity to cure, fails to timely cure the breach or default of the Ancillary Agreement, including, without limitation, the Franchise Owner and Spouse Agreement and Guaranty;
- (n) Franchisee and/or an Owner of Franchisee is convicted of a felony crime, and/or pleads guilty or nolo contendere to a felony crime;
- (o) Franchisee and/or an Owner of Franchisee engages in intentionally dishonest and/or unethical conduct that, in Franchisor's Reasonable Business Judgment, results in embarrassment to Franchisor, the System, the Licensed Marks, MRCOOL Centers, Franchisee's Center, and/or the reputation of the MRCOOL brand;
- (p) Franchisee fails to complete, to Franchisor's reasonable satisfaction, the Training Program and/or supplemental training programs designated by Franchisor;
- (q) Franchisee fails, upon receiving actual or constructive notice, shall: (1) immediately notify
Franchisor of any known breach of the Confidentiality Agreement by any person or entity; (2) immediately notify Franchisor of facts and information that would cause a reasonable person to believe that a person or entity violated the Confidentiality Agreement and/or is in the process of violating the Confidentiality Agreement; and (3) take reasonable steps including ,notice to Franchisor and Franchisee's consultation with Franchisee's legal counsel, to prevent any person or entity from violating the terms of the Confidentiality Agreement and/or otherwise publicly disseminating Confidential Information;
- (r) Franchisee misappropriates, misuses, or makes any unauthorized use of the Licensed Marks, the Confidential Information, and/or the System and/or Franchisee materially impairs the goodwill associated with the Licensed Marks, and/or Franchisee applies for registration of the Licensed Marks anywhere in the world; and/or
- (s) Franchisee and/or an Owner fails to comply with Anti-Terrorism Laws or becomes listed on the Annex to Executive Order 13244.
- (3) Defaults and Automatic Termination After 10 Day Cure Period Franchisee shall be in default of this Agreement and, this Agreement shall be terminated, upon the occurrence of any one or more of the following actions, inactions, omissions, events, and/or circumstances, unless, Franchisee timely cures, to the satisfaction of Franchisor, such default/action, inaction, omission, event, and/or circumstance within 10 calendar days of Franchisor's written notice:
- (a) Franchisee fails, refuses, and/or is unable to timely pay the Royalty Fee, Advertising Contribution, and/or any other payment, fee, financial obligation, charge, and/or monetary obligation payable and/or due to Franchisor pursuant to the terms of this Agreement, under this Agreement, and/or any other agreement between Franchisor and Franchisee;
- (b) Franchisee and/or Franchisee's affiliate fails, refuses, and/or is unable to pay any payment, fee, financial obligation, charge, and/or monetary obligation payable to Franchisor and/or Franchisor's affiliates pursuant to this Agreement and/or any other agreement between or among Franchisor, Franchisor's affiliate, Franchisee and/or Franchisee's affiliate;
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to the 2025 Mrcool Franchise Disclosure Document, there are specific procedures and conditions that define when a franchisee is considered in default of their agreement. Mrcool outlines several actions or inactions that constitute a default, including engaging in activities that harm the brand, breaching ancillary agreements, felony convictions of the franchisee or an owner, engaging in dishonest conduct that embarrasses Mrcool, failing to complete training programs, or failing to notify Mrcool of breaches to the Confidentiality Agreement.
Additionally, the Mrcool franchise agreement specifies that a franchisee will be in default if they fail to pay royalties, advertising contributions, or any other financial obligations to Mrcool, or if the franchisee fails to pay suppliers for goods or services benefiting the franchised business.
Mrcool also stipulates a 10-day cure period for certain defaults after written notice from the franchisor. If the franchisee fails to rectify the specified default within this timeframe to Mrcool's satisfaction, the franchise agreement can be terminated. This cure period applies to failures to make required payments to Mrcool or its affiliates and failures to pay third-party vendors. Prospective franchisees should be aware of these conditions and ensure they understand their obligations to avoid potential default and termination of their Mrcool franchise agreement.