Under what circumstances can Pearce Bespoke terminate the Franchise Agreement immediately upon delivery of written notice, without an opportunity for the franchisee to cure the default?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as described below, Franchisee will have thirty (30) days, or such longer period as applicable law may require, after its receipt from Franchisor of a written Notice of Termination within which to remedy any default hereunder, and to provide evidence thereof to Franchisor. If Franchisee fails to correct the alleged default within that time (or such longer period of time as applicable law may require), this Agreement will terminate without further notice to Franchisee effective immediately when the thirty (30) day period (or such longer period as applicable law may require) expires. Franchisor may terminate this Agreement immediately upon delivery of written notice to Franchisee, with no opportunity to cure, if the termination results from any of the following: (1) Franchisee repeatedly fails to comply with one or more material requirements of this Agreement; (2) the nature of Franchisee's breach makes it not curable; (3) Franchisee willfully and repeatedly deceives customers relative to the source, nature or quality of goods sold; (4) any default under items (1), (3), (6), (8), (9), (11), (12), (13) or (14) in Section 15(A) above; or (5) Franchisee willfully and materially falsifies any report, statement, or other written data furnished to Franchisor either during the franchise application process or after Franchisee is awarded a franchise. For purposes of Section 15(B)(1) of the Franchise Agreement, the word "repeatedly" means Franchisee's failure, on two or more separate occurrences during any twenty-four (24) month period, to comply with one or more material requirements of the Franchise Agreement, even if the default is subsequently cured within the applicable time period. Any report submitted pursuant to Section 12 will be conclusively deemed to be materially false if it understates Gross Sales by more than four percent (4%).
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, there are specific instances where Pearce Bespoke can terminate the Franchise Agreement immediately by providing written notice to the franchisee, without offering an opportunity to correct the default. These circumstances include repeated failure to comply with material requirements of the agreement, situations where the breach is not curable, or instances where the franchisee willfully and repeatedly deceives customers regarding the source, nature, or quality of goods sold.
Specifically, Pearce Bespoke can immediately terminate the agreement if the franchisee defaults under certain items listed in Section 15(A) of the agreement. These include failing to open the franchise, conviction of certain crimes, insolvency, abandonment of the business, conduct that impairs goodwill, frequent customer complaints, repeated defaults, failure to cooperate with audits, violation of non-compete agreements, or unauthorized use of confidential information.
Furthermore, Pearce Bespoke can terminate the agreement immediately if the franchisee willfully and materially falsifies any report, statement, or other written data furnished to Pearce Bespoke during the franchise application process or after being awarded the franchise. The term "repeatedly" is defined as failing to comply with one or more material requirements of the Franchise Agreement on two or more separate occasions during any twenty-four (24) month period, even if the default is subsequently cured within the applicable time period. Any report submitted pursuant to Section 12 will be conclusively deemed to be materially false if it understates Gross Sales by more than four percent (4%).
This means a Pearce Bespoke franchisee needs to be particularly diligent in adhering to all material requirements, maintaining accurate records, and avoiding any actions that could be construed as deceptive or harmful to the brand's reputation. Failure to do so could result in immediate termination of the franchise agreement without any chance to rectify the situation.