What section of the Spray Net Franchise Agreement discusses termination by the franchisor 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. | "Cause" defined – non-curative defaults | Section 15(A) | Your Franchise Agreement may be terminated automatically and without notice from us if: (i) you become insolvent or make a |
| Provision | Franchise | Summary |
|---|---|---|
| Agreement | ||
| Section 15(B) | general assignment for the benefit of creditors; (ii) a bankruptcy | |
| petition if filed by or against you and not dismissed within 30 | ||
| days; (iii) a bill in equity or appointment of receivership is filed | ||
| in connection with you or the Franchised Business; (iv) a receiver | ||
| or custodian of your assets of property is appointed; (v) a final | ||
| judgment in the amount of $10,000 or more is entered against you | ||
| and not satisfied within 60 days (or longer period if we consent); | ||
| and (vi) | ||
| you attempt to make an invalid transfer in violation of | ||
| Section 13 of your Franchise Agreement. | ||
| Your Franchise Agreement may be terminated with notice but | ||
| without an opportunity to cure: (i) if you commit any fraud or | ||
| misrepresentation in the establishment or operation of the | ||
| Franchised Business; (ii) if you fail to attend and complete the | ||
| Initial Training Program; (iii) if you receive 3 or more notices to | ||
| cure the same or similar defaults within any 12-month period; (iv) | ||
| you violate the in-term restrictive covenant; (v) you misuse the | ||
| Proprietary | ||
| Marks or Confidential Information; (vi) you misuses | ||
| any proprietary software; |
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, Section 15 of the Franchise Agreement outlines the circumstances under which Spray Net may terminate the agreement with cause. Item 17(f) specifies that Spray Net can terminate the Franchise Agreement with cause, as further detailed in sections (g)-(h) of Item 17. These sections define what constitutes 'cause' for termination, distinguishing between defaults that can be cured and those that cannot.
Curable defaults, as described in Sections 15(B) and 15(C), include failures 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 10-day cure period for most of these defaults, except for failing to provide access to the Computer System (48 hours), failing to comply with applicable law (15 days), and failing to obtain necessary licenses or permits (10 days). All other defaults must be cured within 30 days of notice.
Non-curable defaults, as detailed in Section 15(A), allow Spray Net to terminate the agreement immediately without notice. These include scenarios such as insolvency, bankruptcy, appointment of a receiver, a final judgment of $10,000 or more against the franchisee, or attempting an invalid transfer of the franchise. Additional causes for termination with notice but without an opportunity to cure include fraud, failure to complete initial training, receiving three or more notices to cure similar defaults within a 12-month period, violating restrictive covenants, misusing proprietary marks or confidential information, defaulting under other agreements, defaulting under the lease, failing to open the franchise on time, abandoning the franchise, being convicted of a felony, or taking assets for personal use.
Prospective Spray Net franchisees should carefully review Section 15 of the Franchise Agreement to understand the specific conditions that could lead to termination. Understanding these provisions is crucial for maintaining compliance and protecting their investment in the Spray Net franchise.