When Nothing Bundt Cakes exercises its Step-In Rights, what happens to the revenue from the Bakery's operation?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
If your default is subject to a cure period, we may exercise our Step-In Rights until such time as we, in our discretion, determine that the default has been cured and you are otherwise compliant with this Agreement.
If your default is not subject to a cure period, we may exercise our Step-In Rights indefinitely. until such time as we, in our discretion, determine that the default has been cured and you are otherwise compliant with this Agreement.
If we exercise our right described in this Section 14.5, all revenue from the Bakery's operation during our Step-in-Rights will (except as provided below) be kept in a separate account, and all Bakery expenses will be charged to that account.
In addition to the fees and payments owed under this Agreement on account of the Bakery's operation you must pay us our then-current per diem charge and reimburse us for all reasonable costs and overhead, if any, incurred in connection with our operation of your Bakery including, without limitation, costs of personnel for supervising and staffing the Bakery and their travel and lodging accommodations.
We or our designee will have a duty to use only reasonable efforts and, if we or our designee is not grossly negligent and does not commit an act of willful misconduct, will not be liable to you or your owners for any debts, losses, lost or reduced profits, or obligations the Bakery incurs, or to any of your creditors for any supplies, products, or other assets or services the Bakery purchases, while we or our designee manages it.
We may require you to sign our then-current form of management agreement, which will govern the terms of our management of the Bakery.
If we undertake to operate the Bakery pursuant to this Section 14.5, you agree to indemnify and hold us (and our representative(s) and employees) harmless from and against any fines, claims, suits or proceedings which may arise out of our operation of the Bakery.
If we or our designee assumes the Bakery's management due to your abandonment or failure actively to operate the Bakery, or after termination or expiration of this Agreement while we are deciding whether to exercise our
right to purchase the Bakery pursuant to Section 15.2, we or our designee may retain all, and need not pay you or otherwise account to you for any, sales generated while we or our designee manages the Bakery.
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
According to Nothing Bundt Cakes' 2025 Franchise Disclosure Document, when Nothing Bundt Cakes exercises its Step-In Rights due to a franchisee's default, the revenue from the bakery's operation is handled in a specific manner. All revenue generated during the period Nothing Bundt Cakes exercises its Step-In Rights will be kept in a separate account, and all bakery expenses will be charged to that same account. This arrangement ensures that the financial activities of the bakery are transparently managed during the period of the franchisor's intervention.
In addition to the standard fees and payments owed under the Franchise Agreement, the franchisee is responsible for covering Nothing Bundt Cakes' costs associated with operating the bakery. This includes the franchisor's then-current per diem charge, as well as reimbursement for all reasonable costs and overhead incurred. These costs may include personnel expenses for supervising and staffing the bakery, along with their travel and lodging accommodations. This ensures that Nothing Bundt Cakes is compensated for the resources it expends to maintain the bakery's operations during the default period.
However, if Nothing Bundt Cakes assumes management of the bakery due to the franchisee's abandonment or failure to actively operate it, or after termination or expiration of the agreement while Nothing Bundt Cakes is deciding whether to purchase the bakery, Nothing Bundt Cakes may retain all sales generated during their management without having to account for them to the franchisee. This provision incentivizes franchisees to maintain active operation of their Nothing Bundt Cakes bakery and ensures that the franchisor is compensated for their efforts in managing a distressed or abandoned location. Franchisees should be aware of the conditions under which Step-In Rights may be exercised and the financial implications involved.