Where can I find the conditions under which Spray Net can terminate the Franchise Agreement with cause?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
tion 3(B) | You have the right to be considered for one (1) additional 10- | | extension of the term | | year term. |
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| c. | Requirements for franchisee to renew or extend | Section 3(B) | In order to renew (which means renewing your franchise relationship with us), you must: (i) not have any uncured material defaults under your Franchise Agreement (including any monetary defaults) or any other agreement between you and us; (ii) execute our then-current franchise agreement (which may contain materially different terms and conditions than your original franchise agreement); (iii) pay us our renewal fee of $10,000; (iv) complete our then-current refresher training course; (v) execute a general release; (vi) must have participate in and supported the operational procedures recommended or provided by us; and (vii) re-image, renovate, refurbish and modernize the Approved Vehicles and Franchised Business. |
| d. | Termination by franchisee | Not Applicable | You may terminate the Franchise Agreement for any reasons allowable under the law. |
| e. | Termination by franchisor without cause | Not Applicable | Not Applicable |
| f. | Termination by franchisor with cause | Section 15 | We may terminate your Franchise Agreement with cause as described in (g)-(h) of this Item 17 Chart. |
| g. | "Cause" defined – curative defaults | Section 15(B) Section 15(C) | Your Franchise Agreement may be terminated based on the following defaults after the applicable cure periods: (i) if you fail to cure any of the following defaults after 10 days' notice: (a) failure to provide the Approved Services using only the Proprietary Products and other products we approve or failure to offer any Approved Service or Approved Product we require; (b) the provision of any Ancillary Service without proper approval or other authority from us; (c) any purchase of any non-approved item or service; (d) failure to purchase any item from the appropriate Approved Supplier(s), and (e) fail to cure any monetary default; (ii) you fail to provide us with access to the Computer System and fail to remedy this default within 48 hours; (iii) you fail, after 15 days' notice, to comply with any applicable law; (iv) you fail, after 10 days' notice, to obtain any applicable license, certificate, permits, or approval; and (v) you fail to meet the Minimum Productivity Levels. Except as provided above and those defaults listed in (h) of this Item 17 Chart, you must cure all other defaults and violations of any provision of your Franchise Agreement or any other agreement with us or our affiliates within 30 days of being provided with notice of your default(s). |
| h. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–62)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, Item 17 details the conditions under which the franchise agreement can be terminated with cause. Section 15 of the Franchise Agreement, as referenced in the table, outlines these conditions. Specifically, there are two categories of "cause" for termination: defaults that can be cured and those that cannot.
Curable defaults, detailed in Sections 15(B) and 15(C) of the Franchise Agreement, include failing to use approved products or services, providing unapproved ancillary services, purchasing non-approved items, failing to buy from approved suppliers, and monetary defaults. Franchisees typically have a period to correct these defaults after receiving notice, such as 10 days for specific violations or 30 days for general breaches of the agreement. Failure to meet Minimum Productivity Levels is also a curable default.
Non-curable defaults, found in Section 15(A) of the Franchise Agreement, allow Spray Net to terminate the agreement immediately without notice. These include insolvency, bankruptcy, appointment of a receiver, a significant judgment against the franchisee (specifically, $10,000 or more that remains unsatisfied for 60 days), or attempting an invalid transfer of the franchise. Additionally, Spray Net can terminate the agreement with notice but without an opportunity to cure for actions like fraud, failure to complete initial training, receiving multiple notices to cure similar defaults, violating restrictive covenants, misusing proprietary marks or confidential information, defaulting under other agreements, or abandoning the franchised business. A felony conviction that adversely affects the Spray Net system also constitutes a non-curable default.
Prospective Spray Net franchisees should carefully review Section 15 of the Franchise Agreement to fully understand their obligations and the circumstances that could lead to termination. Understanding both curable and non-curable defaults is crucial for maintaining a successful and compliant franchise operation. Franchisees should also be aware of the specific cure periods and the potential for immediate termination in certain situations.