Are there any circumstances under which Spray Net can terminate the franchise agreement without cause?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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 |
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, Spray Net cannot terminate the franchise agreement without cause. The table in Item 17 outlines various provisions related to termination, including termination by the franchisee, termination by Spray Net with cause, and definitions of 'cause' for both curative and non-curative defaults. Specifically, the FDD states 'Termination by franchisor without cause' is 'Not Applicable'.
Spray Net can terminate the Franchise Agreement with cause, which is defined by both curative and non-curative defaults. Curative defaults include failing to use approved products, providing unauthorized ancillary services, purchasing non-approved items, failing to purchase from approved suppliers, failing to cure any monetary default, failing to provide access to the computer system, failing to comply with applicable laws, failing to obtain necessary licenses, and failing to meet minimum productivity levels. Franchisees typically have a period to cure these defaults after receiving notice.
Non-curative defaults, on the other hand, allow Spray Net to terminate the agreement immediately without notice or an opportunity to cure. These include insolvency, bankruptcy, assignment for the benefit of creditors, receivership, a final judgment of $10,000 or more not satisfied within 60 days, attempting an invalid transfer, committing fraud or misrepresentation, failing to attend initial training, receiving three or more notices to cure similar defaults within 12 months, violating restrictive covenants, misusing proprietary marks or confidential information, defaulting under other agreements, defaulting under the lease, failing to open the franchised business on time, abandoning the business, conviction of a felony, taking assets for personal use, insufficient funds in the payment account multiple times, repeated violations of laws, or repeated failures to comply with standards in the operations manual.