What remedies are available to Spray Net for a violation of the agreement?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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 the event Franchisor elects to reduce Franchisee's Designated Territory and/or terminate Franchisee's exclusive rights therein, Franchisor will provide Franchisee with written notice thereof.
Upon receipt of such notice, Franchisee will have ten (10) calendar days to execute an addendum to this Agreement detailing the revised boundaries of the Designated Territory and/or termination of exclusive rights therein.
If Franchisee does not execute this Addendum with the prescribed time period, then Franchisor may, at its option, immediate terminate this Agreement upon notice to Franchisee.
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.
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.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, several remedies are available to Spray Net in the event of a franchisee's violation of the franchise agreement. One key remedy is the right to restrict a franchisee's access to the Spray-Network, the software platform essential for managing the franchise. This restriction can occur if a franchisee fails to pay invoices, breaches the franchise agreement, or upon termination of the franchise.
Additionally, Spray Net has the option to reduce the size of a franchisee's designated territory or terminate their exclusive rights within that territory if the franchisee defaults under Section 6(Z) of the agreement. In such cases, Spray Net will provide written notice, and the franchisee has ten calendar days to execute an addendum detailing the revised territory boundaries or the termination of exclusive rights. Failure to execute the addendum within this timeframe allows Spray Net to immediately terminate the agreement.
Furthermore, Spray Net has 'step-in rights,' which allow them to enter the franchisee's premises and assume complete authority over the operation of the franchised business if the agreement is subject to termination due to the franchisee's failure to cure a default. This right is not an obligation and is in addition to Spray Net's right to terminate the agreement. Spray Net can exercise this authority until they determine, in their reasonable discretion, that the defaults have been cured and the franchisee is in compliance with the agreement terms.
It is important to note that these remedies are subject to certain state laws, such as those in Minnesota, which may affect the conditions under which the agreement can be terminated or not renewed. For instance, Minnesota law requires that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal, except in certain specified cases. Prospective franchisees should be aware of the specific laws in their state and how they may impact the remedies available to Spray Net.