What actions can My Salon Suite take if a franchisee defaults on the financing note?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) The following are events of default under the Note: (1) your failure to pay any principal, or any other charge or expense payable under the Note, (2) any breach or default by you of any warranty, representation, covenant, term or condition stated in the Note, in the franchise agreement, or in any other security instrument, affidavit or other agreement or instrument between us, (3) if the franchise agreement is terminated for any reason by us, (4) if you are not paying your debts as such debts become due, (5) the commencement of any proceedings under any bankruptcy or insolvency laws by or against you or (6) the sale, assignment, transfer or conveyance of all or substantially all your assets. If you default, we may terminate the franchise agreement and all outstanding principal under the Note will
- be immediately due and payable. Also, you must pay the costs, fees, and expenses we incur in enforcing the Note.
- (3) Under the Note you waive presentment, demand for payment, protest and notice of nonpayment by the makers, endorsers and guarantors of the Note. We receive no consideration for offering you financing.
Source: Item 10 — FINANCING (FDD pages 41–42)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, several actions can be taken if a franchisee defaults on their financing note. These events of default include failing to make payments, breaching any terms in the note or franchise agreement, termination of the franchise agreement by My Salon Suite for any reason, inability to pay debts as they become due, commencement of bankruptcy proceedings, or the sale of substantially all of the franchisee's assets.
If a franchisee defaults on the note, My Salon Suite has the right to terminate the franchise agreement. Upon default, all outstanding principal under the note becomes immediately due and payable. The franchisee is also responsible for covering all costs, fees, and expenses that My Salon Suite incurs while enforcing the note.
My Salon Suite also waives certain rights under the note, such as presentment, demand for payment, protest, and notice of nonpayment. This means that My Salon Suite is not required to formally present the note for payment, demand payment, or provide notice if payment is not made. The note is secured by a personal guarantee, and upon default, My Salon Suite can pursue legal action and may waive the need to provide notice or confess judgment.
For franchisees, this means understanding the serious consequences of defaulting on the financing note. Defaulting not only leads to immediate financial obligations but also risks the termination of the franchise agreement. Franchisees should ensure they fully understand the terms of the note and franchise agreement and maintain open communication with My Salon Suite to address any potential financial difficulties.