Where in the Spray Net franchise agreement can I find information about 'Default and Termination'?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
Termination: SPRAY-NET retains the right to restrict access to the Spray-Network in the event of failure to pay invoices, breach of franchise agreement or termination of a Franchise.
Section 15 of the Franchise Agreement is hereby modified to add the following language:
The conditions under which this Agreement can be terminated or not renewed may be affected by Minnesota law, which provides Franchisee with certain termination and nonrenewal rights. Minnesota State Section 80C.14 Subd. 3-5, which require, except in certain specified cases, that Franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the Franchise Agreement.
Franchisee's failure to comply with any of Franchisor's other System standards and specifications in the operation of the Franchised Business as set forth in the Manuals; and (ii) fails to cure such breach or violation within thirty (30) days of the date Franchisee is provided with notice thereof by Franchisor.
Notwithstanding the foregoing, if Franchisee is in default of this Agreement under Section 6(Z), Franchisor may, in its sole discretion and as an alternative to terminating this Agreement, elect to reduce the size of Franchisee's Designated Territory and own and operate, or license another to operate, additional Spray-Net businesses in the Designated Territory.
In addition to Franchisor's right to terminate this Agreement, and not in lieu of such right or any other rights hereunder, if this Agreement is subject to termination due to Franchisee's failure to cure any default within the applicable time period (if any), then Franchisor has the right, but not the obligations, to enter the Premises and exercise complete authority with respect to the operation of the Franchised Business until such time that Franchisor determines, in its reasonable discretion, that the default(s) at issue have been cured and that Franchisee is otherwise in compliance with the terms of this Agreement.
The Franchise Agreement provides for termination upon bankruptcy of the franchisee. This provision may not be enforceable under federal bankruptcy law.
Thus, effective upon the termination or expiration and non-renewal of this Agreement, Franchisee agrees to direct the telephone company servicing Franchisee, per Franchisor's request, to disconnect the telephone number used in connection with the Franchised Business or transfer such number to Franchisor or to any person or location of Franchisor's choosing.
Therefore, upon the termination of this Agreement before the end of the Term, Franchisee shall pay Franchisor liquidated damages equal to seven percent (7%) of the applicable annual Minimum Gross Sales for the Franchised Business found in Section 6.Z. of this Agreement corresponding to the year of operation in which this agreement is terminated.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to the 2025 Spray Net Franchise Disclosure Document, several sections of the agreement address default and termination. Item 23 includes information regarding Spray-Net's right to restrict access to the Spray-Network in the event of a breach of the franchise agreement or termination of a franchise. Additionally, Section 15 of the Franchise Agreement is modified by the Minnesota addendum to include language about Minnesota law affecting the conditions under which the agreement can be terminated or not renewed, citing Minnesota State Section 80C.14 Subd. 3-5, which requires 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal, except in certain cases.
Furthermore, if a Spray Net franchisee fails to comply with system standards and specifications and does not cure the breach within 30 days of notice, it can be considered a default. Spray Net also has the option to reduce the size of the franchisee's designated territory if the franchisee is in default under Section 6(Z), offering a written notice with ten calendar days for the franchisee to execute an addendum detailing the revised territory boundaries. Failure to execute the addendum allows Spray Net to immediately terminate the agreement. In the event of termination due to uncured default, Spray Net has step-in rights to operate the franchised business until the defaults are cured.
Finally, the Maryland Addendum to the Franchise Agreement states that the Franchise Agreement provides for termination upon bankruptcy of the franchisee, though this provision may not be enforceable under federal bankruptcy law. Upon termination or expiration and non-renewal of the agreement, the franchisee must disconnect the telephone number used in connection with the franchised business or transfer it to Spray Net. If the franchisee fails to do so, Spray Net is irrevocably appointed as the franchisee's attorney-in-fact for purposes of directing and accomplishing such transfer. If the agreement is terminated before the end of the term, the franchisee shall pay Spray Net liquidated damages equal to seven percent (7%) of the applicable annual Minimum Gross Sales for the Franchised Business found in Section 6.Z. of this Agreement corresponding to the year of operation in which this agreement is terminated.