What constitutes 'good cause' for Pearce Bespoke to terminate a franchise agreement?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO THE PEARCE BESPOKE FRANCHISING LLC DISCLOSURE DOCUMENT AND FRANCHISE AGREEMENT REQUIRED BY THE STATE OF MICHIGAN
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU:
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than thirty (30) days, to cure such failure.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, 'good cause' for termination in Michigan includes the franchisee's failure to comply with any lawful provision of the franchise agreement, provided they are given written notice and a reasonable opportunity to cure the failure, which need not exceed 30 days. This protection is specifically mandated by Michigan state law and supersedes any conflicting provisions in the standard franchise agreement.
Beyond the Michigan-specific addendum, the FDD outlines several other conditions under which Pearce Bespoke can terminate the franchise agreement. These include failing to open the franchise within a specified timeframe, violating any material provision of the agreement, or criminal convictions of the franchisee or its key personnel that adversely impact the business's reputation. Other causes include failure to meet business system standards, non-payment of fees, insolvency, abandonment of the business, or conduct that impairs the goodwill associated with the Pearce Bespoke brand.
Additionally, Pearce Bespoke may terminate the agreement if the franchisee defaults on any other agreement with Pearce Bespoke or its affiliates, receives frequent customer complaints, or repeats a previously cured default within a year. Failure to cooperate with audits, violation of non-compete clauses, unauthorized use of confidential information, or failure to pay termination fees also constitute grounds for termination. The FDD specifies that 'frequent' complaints mean three or more different customer complaints in a 12-month period, regardless of resolution.
These termination clauses are typical in franchise agreements, designed to protect the brand and maintain standards across all franchise locations. Prospective Pearce Bespoke franchisees should carefully review these conditions to understand their obligations and the potential consequences of non-compliance. The cure periods and materiality standards can be critical points of negotiation before signing the agreement.