Does Pearce Bespoke's imposition of an Operational Standards Violation Fee prevent them from terminating the franchise agreement?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor has established certain operational standards, as set forth in the Operations Manual. Franchisee acknowledges that any deviation from an operational standard constitutes a violation of this Agreement and will require Franchisor to incur incalculable administrative and management costs to address such violation. Accordingly, Franchisee agrees that, to compensate Franchisor for its incalculable administrative and management costs due to Franchisee's operational standard violation, Franchisee shall pay Franchisor an Operational Standards Violation Fee, as set forth in the Operations Manual, for each violation of an operational standard. Franchisee hereby
authorizes Franchisor to take payment of the Operational Standards Violation Fee, at Franchisor's option, through electronic funds transfer or ACH payment. Franchisor need not give Franchisee a cure opportunity before charging the Operational Standards Violation Fee, and Franchisor's imposition of an Operational Standards Violation Fee does not preclude Franchisor from seeking injunctive relief to restrain any subsequent or continuing violation, formally defaulting and terminating this Agreement or exercising any of Franchisor's rights under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the imposition of an Operational Standards Violation Fee does not prevent Pearce Bespoke from terminating the franchise agreement. Pearce Bespoke has established operational standards in the Operations Manual, and any deviation from these standards constitutes a violation of the Franchise Agreement. To compensate Pearce Bespoke for the administrative and management costs associated with addressing such violations, a franchisee must pay an Operational Standards Violation Fee, as detailed in the Operations Manual, for each violation.
The FDD states that Pearce Bespoke need not provide a cure opportunity before charging this fee. Furthermore, the imposition of the Operational Standards Violation Fee does not prevent Pearce Bespoke from seeking injunctive relief to stop any ongoing or future violations. It also does not prevent Pearce Bespoke from formally defaulting and terminating the Franchise Agreement or exercising any other rights they have under the agreement.
This means that even if a franchisee pays the Operational Standards Violation Fee, Pearce Bespoke retains the right to pursue further legal action, including terminating the franchise agreement, if the franchisee continues to violate operational standards. This clause underscores the importance of adhering to Pearce Bespoke's operational standards and the potential consequences of failing to do so, even if the franchisee pays the required fees for violations.