Does the Mrcool FDD specify any conditions under which the franchisor can terminate the Multi-Unit Development Agreement?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
3.2 TERMINATION BY FRANCHISOR
Franchisor possesses the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement; (b) if Franchisee for four consecutive months, or any shorter period that indicates an intent by Franchisee to discontinue Franchisee's development of Centers within the Development Area; (c) if Franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by Franchisee, or by others against the Franchisee, under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit or creditors or a receiver is appointed by the Franchisee; (d) if Franchisee fails to meet its development obligations under the Development Schedule for any single Development Period including, but not limited to, Franchisee's failure to establish, open and/or maintain the cumulative number of MRCOOL Centers in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Development Center and/or any other Franchise Agreement between Franchisor and Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the franchisor has the right to terminate the Multi-Unit Development Agreement under certain conditions, without providing an opportunity for the franchisee to correct the issue. These conditions include if the franchisee abandons their obligations under the agreement, or if the franchisee, for four consecutive months or a shorter period, indicates an intent to discontinue the development of Centers within the Development Area.
Additionally, Mrcool can terminate the agreement if the franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by the franchisee or others against the franchisee under any insolvency, bankruptcy, or reorganization act. Termination can also occur if the franchisee makes an assignment for the benefit of creditors or a receiver is appointed for the franchisee.
Furthermore, Mrcool can terminate the agreement if the franchisee fails to meet its development obligations under the Development Schedule for any single Development Period, including failing to establish, open, and/or maintain the cumulative number of MRCOOL Centers as per the Development Schedule. Finally, the agreement can be terminated if any single Franchise Agreement is terminated regarding any Development Center or any other Franchise Agreement between Mrcool and the franchisee.