If a Pearce Bespoke franchisee's manager is convicted of a felony, can the franchise agreement be terminated?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee will be in default, and Franchisor may, at its option, terminate this Agreement, as provided herein, if:
- (3) Franchisee or any of its managers, directors, officers, or majority shareholders are convicted of, or plead guilty to or no contest to (a) a charge of violating any law which at Franchisor's sole discretion, adversely impacts upon the reputation of the franchised business or (b) any felony;
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the franchise agreement can be terminated if a franchisee's manager is convicted of a felony. Specifically, if any of the franchisee's managers are convicted of, plead guilty to, or plead no contest to any felony, Pearce Bespoke has the option to terminate the agreement. This clause aims to protect the reputation of the Pearce Bespoke brand.
This provision in the franchise agreement means that Pearce Bespoke franchisees must exercise caution and diligence in their hiring and management practices. A criminal conviction of a manager, even if it is unrelated to the business, could lead to the termination of the franchise agreement. This could result in significant financial losses for the franchisee, including the loss of their initial investment and future profits.
It is important to note that the termination is at Pearce Bespoke's option, meaning they are not obligated to terminate the agreement. They may consider the nature of the felony, the manager's role in the business, and other factors before making a decision. However, the franchisee should be aware of this risk and take steps to prevent such a situation from occurring. Franchisees should consult with legal counsel to fully understand the implications of this clause and to develop strategies for mitigating the risk of termination due to a manager's criminal conviction.