What happens to a Mrcool franchisee's rights under the Multi-Unit Development Agreement upon termination or non-renewal?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
. You should read these provisions in the agreements attached to this Disclosure Document.**
| | Provision | Sections in Multi-Unit Development Agreement | Summary | |----|---------------------------------------------------|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | a. | Length of the franchise term | 3 | Varies depending on the number of Centers to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Center required for development, or the last day of the calendar month in which the final Center was required to be open under the Multi-Unit Development Agreement. | | b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development | | | term | applicable | Agreement. | | c. | Requirements for franchisee to | Not | There is no renewal of the Multi-Unit Development | | | renew or extend | applicable | Agreement. | | d. | Termination by franchisee | Not applicable | You may terminate the Multi-Unit Development Agreement for any grounds available at law. | | e. | Termination by franchisor | Not | We can terminate without cause only if you and we | | | without cause | applicable | mutually agree, in writing, to terminate. | | f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Centers within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Centers in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is |
| g | "Cause" defined-curable | Not | Not applicable.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the Multi-Unit Development Agreement has no renewal option. The agreement's term varies based on the number of centers to be developed and the development area. It commences on the effective date and expires when the final center is opened or on the last day of the month the final center was required to open.
The FDD states that Mrcool franchisees may terminate the Multi-Unit Development Agreement for any grounds available at law. Mrcool can only terminate the agreement without cause if both parties mutually agree in writing. However, Mrcool can terminate the agreement with cause under specific circumstances. These circumstances include abandoning obligations, discontinuing development of centers, insolvency or bankruptcy, failure to meet development obligations, or termination of any individual Franchise Agreement.
The non-competition covenants during and after the term of the franchise are not applicable to the Multi-Unit Development Agreement itself. However, each Mrcool center developed under the agreement will be subject to the non-competition covenants outlined in its respective Franchise Agreement. This means that even after the Multi-Unit Development Agreement ends, the franchisee is still bound by the non-competition terms of each individual Mrcool franchise they operate.