If a Mrcool franchisee abandons their obligations, can Mrcool terminate the Multi-Unit Development Agreement?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD 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 |
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, Mrcool can terminate the Multi-Unit Development Agreement with cause if the franchisee abandons their obligations under the agreement. This is a standard protection for franchisors to ensure that franchisees are actively developing their territories as agreed. Abandonment is listed as one of several reasons Mrcool can terminate the agreement.
Other reasons Mrcool can terminate the agreement with cause include if the franchisee, for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Centers within the Development Area; becomes 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; fails 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 in the event that any one Franchise Agreement is.
This clause protects Mrcool from franchisees who may become unable or unwilling to fulfill their development commitments. For a prospective franchisee, this highlights the importance of having a solid business plan and sufficient capital to meet the development schedule outlined in the Multi-Unit Development Agreement. It also underscores the need to maintain open communication with Mrcool regarding any challenges or potential delays in meeting those obligations.