Under what circumstances can the Pearce Bespoke franchise agreement be terminated by the Franchisor?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
A. Grounds.
Franchisee will be in default, and Franchisor may, at its option, terminate this Agreement, as provided herein, if:
- (1) Franchisee fails to open and commence operations of the Pearce Bespoke Franchise at such time as the premises are ready for occupancy or within three (3) months of the execution of this Agreement, whichever occurs first;
- (2) Franchisee violates any material provision or obligation of this Agreement;
- (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;
- (4) Franchisee fails to conform to the material requirements of the Business System or the material standards of uniformity and quality for the products and services Franchisor has
established in connection with the Business System;
(5) Franchisee fails to timely pay Royalty Fees, Marketing, Technology or Advertising Fees, buying group (inventory) obligations or any other fees, obligations or liabilities due and owing to Franchisor or fails to timely pay any advertising cooperative obligations;
(6) Franchisee is insolvent within the meaning of any applicable state or federal law;
(7) Franchisee makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors;
(8) Franchisee voluntarily or otherwise "abandons" (as defined below) the franchised business or fails to operate the business for a period of seven (7) consecutive days without Franchisor's prior written approval.
The term "abandon" means Franchisee's failure to operate the Pearce Bespoke Franchise during regular business hours for a period of ten (10) consecutive days without Franchisor's prior written consent unless such failure is due to an act of God, war, strikes, or riots;
[Item 22: CONTRACTS]
The term "abandon" means Franchisee's failure to operate the Pearce Bespoke Franchise during regular business hours for a period of ten (10) consecutive days without Franchisor's prior written consent unless such failure is due to an act of God, war, strikes, or riots;
(9) Franchisee is involved in any act or conduct which at Franchisor's sole discretion, materially impairs the goodwill associated with the name "Pearce Bespoke" or any of the Marks or the Business System;
(10) Franchisee defaults in any other agreement with Franchisor, its subsidiaries or affiliates, and does not cure such default in accordance with the terms of such other agreement;
(11) Franchisee receives frequent and/or severe complaints from customers and/or employees concerning the Pearce Bespoke Franchise.
Frequent shall mean there (3) or more different customer complaints with respect to the Pearce Bespoke Franchise in any twelve (12) month period, whether or not resolved;
(12) After curing a default, engages in the same default within a twelve (12) month period whether or not this default is corrected after notice; or, within any twenty-four (24) month period, engages in four (4) separate defaults, whether or not these defaults are cured after notice;
(13) Franchisee fails to fully cooperate and timely complete any audit or mandatory survey requested by Franchisor;
(14) Franchisee violates the in-term covenant not to compete;
(15) Franchisee makes any unauthorized use, disclosure or duplication of any portion of the Manuals or duplicates, discloses or makes any unauthorized use of any Confidential Information provided to Franchisee by Franchisor;
(16) Fails to pay any fee charged in lieu of termination.
[Item 22: CONTRACTS]
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 the 2025 Pearce Bespoke Franchise Disclosure Document, Pearce Bespoke has the option to terminate the franchise agreement if the franchisee is in default. There are numerous conditions that constitute default. These include failing to open the franchise within a specified timeframe, violating any material provision of the agreement, or if the franchisee or related parties are convicted of a crime that adversely impacts the franchise's reputation.
Other conditions for termination involve the franchisee's failure to meet the standards of the Pearce Bespoke Business System, or failure to pay fees, obligations, or liabilities owed to Pearce Bespoke. Insolvency, assignment of assets for the benefit of creditors, or abandoning the business also constitute grounds for termination. Abandonment is defined as failing to operate the franchise for a week without prior written approval from Pearce Bespoke, unless due to events like acts of God, war, strikes, or riots.
Further reasons for termination include conduct that impairs the goodwill associated with the Pearce Bespoke name, defaulting on other agreements with Pearce Bespoke, receiving frequent customer complaints, or repeating a default within a year. Failing to cooperate with audits, violating non-compete agreements, unauthorized use of manuals or confidential information, and failing to pay termination fees are also grounds for termination.
It is important to note that in Michigan, a franchisor can only terminate a franchise agreement prior to its expiration for good cause, which includes failure to comply with any lawful provision of the franchise agreement and failure to cure such non-compliance after written notice and a reasonable opportunity to cure (no more than 30 days).