What are the key provisions of the Nothing Bundt Cakes franchise and related agreements that I should carefully review?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 17: RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION]
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
THE FRANCHISE RELATIONSHIP
This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this disclosure document.
| PROVISION | SECTION IN | SUMMARY | |
|---|---|---|---|
| FRANCHISE | |||
| OR OTHER | |||
| AGREEMENT | |||
| any portion of the Gross Sales of your Bakery into a bank account | |||
| not approved of by us or which is not accessible to us via EFT; (j) | |||
| you offer any unauthorized or unapproved products or services in | |||
| connection with the operation of your Bakery; or (k) you order or | |||
| purchase supplies from unapproved suppliers. | |||
| Except as stated for above, we have the right to terminate the | |||
| Franchise Agreement after providing you a 30-day cure period if you | |||
| fail to perform or comply with any one or more of the terms or | |||
| conditions of the Franchise Agreement or any other agreement with | |||
| us or our affiliates, including compliance with the Operations | |||
| Manual. | |||
| h. | "Cause" defined | 14.1 and 14.2 of | The Franchise Agreement will automatically terminate without |
| notice or an opportunity to cure if: (a) you make an assignment for | |||
| – non-curable | Franchise | the benefit of creditors, file a voluntary petition in bankruptcy, are | |
| defaults | Agreement and 8 | ||
| of Development | adjudicated bankrupt or insolvent, file or acquiesce in the filing of a | ||
| petition seeking reorganization or arrangement under any federal or | |||
| Rights Rider | state bankruptcy or insolvency law, or consent to or acquiesce in the | ||
| appointment of a trustee or receiver for you or the Bakery; (b) | |||
| proceedings are commenced to have you adjudicated bankrupt or to | |||
| seek your reorganization under any state or federal bankruptcy or | |||
| insolvency law, and such proceedings are not dismissed within 60 | |||
| days, or a trustee or receiver is appointed for you or the Bakery | |||
| without your consent, and the appointment is not vacated within 60 | |||
| days; or (c) you purport to sell, transfer or otherwise dispose of your | |||
| interest in the Franchise Business without our written approval. | |||
| We have the right to terminate the Franchise Agreement with notice | |||
| without providing you an opportunity to cure if: (a) you take part in | |||
| criminal acts or misconduct; (b) you commit fraud or make any | |||
| material misrepresentations; (c) you make any misrepresentations in | |||
| connection with the franchise application; (d) you fail to complete | |||
| our initial training program or any ongoing training program to our | |||
| satisfaction within the time frames we designate; (e) you receive two | |||
| or more written notices of default within any 12 month period; (f) | |||
| you materially breach any other agreement with us or our affiliates, | |||
| or your landlord, or threaten a material breach of such an agreement, | |||
| including any lease for the Approved Location, and fail to cure the | |||
| breach within any applicable cure period; (g) you misuse the Marks | |||
| or Confidential Information; (h) you violate any health, safety or | |||
| sanitation law; (i) you violate the in-term restrictive covenants of the | |||
| Franchise Agreement; (j) a lien or writ of attachment or execution is | |||
| placed against you and is not released or bonded against within 30 | |||
| days; (k) you become insolvent; (l) you abandon the Bakery; (m) you | |||
| misuse our proprietary software; (n) you fail to maintain required | |||
| insurance; (o) you fail to comply with any governmental notice of | |||
| PROVISION | SECTION IN | SUMMARY | |
| ---- | ----------------------------------------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| FRANCHISE OR OTHER AGREEMENT | |||
| "Transfer" by you – definition | 17.2 and 17.3 of Franchise Agreement | pledge or transfer of any fractional portion of your voting stock, or any increase in the number of outstanding shares of your voting stock which results in a change in ownership; (ii) if you are a partnership, upon the assignment, sale, pledge or transfer of any fractional partnership ownership interest; or (iii) if you are a limited liability company, upon any assignment, sale, pledge or transfer of any fractional portion of any interest in the limited liability company. | |
| l. | Our approval of transfer by franchisee | 17.2 and 17.4 of Franchise Agreement and 9 of Development Rights Rider | You may not transfer any rights in the franchise without our prior written consent. We have the right to condition our approval of any sale, transfer, assignment or encumbrance as described below. Your development rights under Development Rights Rider are not assignable. |
| m. | Conditions for our approval of transfer | 17.4 of Franchise Agreement | We will approve a proposed transfer if: (i) all of your accrued monetary obligations to us, our affiliates, and our approved and designated suppliers have been paid; (ii) all existing defaults under the Franchise Agreement have been cured; (iii) you execute a general release in favor of us and our affiliates; (iv) you provide us a copy of the executed purchase agreement; (v) the transferee meets our qualifications; (vi) the transferee executes our then-current Franchise Agreement for the remaining unexpired term of the Franchise Agreement; (vii) you pay us a $10,000 transfer fee in the event of a transfer of the Bakery or $5,000 in the event of a transfer of the ownership interests in franchisee; (viii) the transferee satisfactorily completes our training program; (ix) you comply with the post term provisions of the Franchise Agreement; (x) the transferee obtains all necessary licenses and permits required to operate the Bakery; (xi) to the extent required by the terms of any leases or other agreements, the lessors or other parties must have consented to the proposed transfer; (xii) the transfer is made in compliance with all applicable laws; (xiii) the purchase price and terms of the proposed transfer are not so burdensome to the prospective transferee as to impair or materially threaten its future operation of the Bakery and performance under its Franchise Agreement; (xiv) you must request that we provide the prospective transferee with our current form of disclosure document and we shall not be liable for any representations not included in the disclosure document; (xv) our approval of the transfer shall not constitute a waiver of any claims we may have against the transferring party; (xvi) we shall have the right to disclose to any prospective transferee such revenue reports and other financial information concerning you and your Bakery as you have supplied us; and (xvii) we may withhold or condition our consent to any transfer as we deem appropriate based on the circumstances of the transfer or otherwise. |
| PROVISION | SECTION IN | SUMMARY |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 64–71)
What This Means (2025 FDD)
According to the 2025 Nothing Bundt Cakes Franchise Disclosure Document, Item 17 provides a table that lists important provisions of the franchise and related agreements. It is important to read these provisions in the agreements attached to the disclosure document.
One key area to review is the definition of "cause" for termination without an opportunity to cure. The Franchise Agreement will automatically terminate if you make an assignment for the benefit of creditors, file for bankruptcy, are adjudicated bankrupt or insolvent, seek reorganization under bankruptcy law, or consent to the appointment of a trustee or receiver. It will also terminate if proceedings are commenced to have you adjudicated bankrupt or seek reorganization and such proceedings are not dismissed within 60 days, or a trustee or receiver is appointed without your consent and the appointment is not vacated within 60 days, or if you sell, transfer or dispose of your interest in the franchise without written approval.
Nothing Bundt Cakes can terminate the Franchise Agreement with notice but without an opportunity to cure for various reasons, including criminal acts, fraud, misrepresentations, failure to complete training, receiving two or more default notices in a 12-month period, breaching agreements with Nothing Bundt Cakes or its affiliates (or your landlord), misusing the Marks or Confidential Information, violating health, safety, or sanitation laws, violating in-term restrictive covenants, a lien being placed against you that isn't released within 30 days, insolvency, abandoning the Bakery, misusing proprietary software, failing to maintain required insurance, or failing to comply with governmental notices.
The FDD also outlines the conditions for transferring a Nothing Bundt Cakes franchise. You cannot transfer any rights without prior written consent from Nothing Bundt Cakes. Approval is conditional on several factors, including paying all accrued monetary obligations, curing existing defaults, executing a general release, providing a copy of the purchase agreement, ensuring the transferee meets Nothing Bundt Cakes' qualifications, the transferee executing the current Franchise Agreement, paying a transfer fee ($10,000 for the Bakery or $5,000 for ownership interests), the transferee completing training, complying with post-term provisions, obtaining necessary licenses and permits, consent from lessors, compliance with laws, and ensuring the transfer terms don't impair the Bakery's future operation. Nothing Bundt Cakes also has the right to disclose financial information to prospective transferees and can withhold or condition consent as deemed appropriate.