If a Mrcool franchisee fails to meet development obligations under the Development Schedule, 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 fails to meet development obligations under the Development Schedule. This includes failing to establish, open, and/or maintain the cumulative number of Centers in accordance with the Development Schedule for any single Development Period. This is a significant point for potential multi-unit franchisees to consider.
This provision means that Mrcool has the right to terminate the agreement if the franchisee does not adhere to the agreed-upon timeline for opening new locations. The Development Schedule outlines the specific milestones and deadlines for establishing and opening Centers within the designated Development Area. Failure to meet these obligations gives Mrcool grounds for terminating the agreement.
For a prospective Mrcool multi-unit franchisee, this underscores the importance of carefully evaluating the Development Schedule and ensuring that they have the resources and capabilities to meet the required milestones. Failing to do so could result in the termination of the agreement and the loss of the opportunity to develop the territory. It is crucial to have a realistic assessment of the market, secure adequate financing, and establish efficient operational processes to avoid falling behind schedule and risking termination.