What is the significance of 'good cause' in the context of Zoomin Groomin repurchasing a franchisee's business?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
d keep this copy for your records.
Schedule 6-State Addenda to the Franchise Agreement
CALIFORNIA ADDENDUM TO THE FRANCHISE AGREEMENT
If any of the terms of the Area Representative Agreement are inconsistent with the terms below, the terms below control.
Cal. Bus. & Prof. Code § 20020 and Cal. Bus. & Prof. Code § 20021 supersede the Area Representative Agreement in your relationship with us. As such, Sections 8.2 and 8.3 are deleted and replaced by the following:
CA Bus & Prof Code Section 20021
Except as otherwise provided by this chapter, no franchisor may terminate a franchise prior to the expiration of its term, except for good cause. Except as provided in Section 20021, good cause shall be limited to the failure of the franchisee to substantially comply with the lawful requirements imposed upon the franchisee by the franchise agreement after being given notice at least 60 days in advance of the termination and a reasonable opportunity, which in no event shall be less than 60 days from the date of the notice of noncompliance, to cure the failure. The period to exercise the right to cure shall not exceed 75 days unless there is a separate agreement between the franchisor and franchisee to extend the time.
CA Bus & Prof Code Section 20021
If during the period in which the franchise is in effect, there occurs any of the following events which is relevant to the franchise, immediate notice of termination without an opportunity to cure, shall be deemed reasonable:
- (a) The franchisee or the business to which the franchise relates has been the subject of an order for relief in bankruptcy, judicially determined to be insolvent, all or a substantial part of the assets thereof are assigned to or for the benefit of any creditor, or the franchisee admits his or her inability to pay his or her debts as they come due;
- (b) The franchisee abandons the franchise by failing to operate the business for five consecutive days during which the franchisee is required to operate the business under the terms of the franchise, or any shorter period after which it is not unreasonable under the facts and circumstances for the franchisor to conclude that the franchisee does not intend to continue to operate the franchise, unless such failure to operate is due to fire, flood, earthquake, or other similar causes beyond the franchisee'
Source: Item 9 — 01. Financial Statements and Exhibits. (FDD pages 68–156)
What This Means (2025 FDD)
According to Zoomin Groomin's 2025 Franchise Disclosure Document, the concept of 'good cause' is significant because it dictates the circumstances under which Zoomin Groomin can terminate a franchise agreement before its natural expiration. In general, Zoomin Groomin cannot terminate a franchise agreement prior to the end of its term unless there is 'good cause'.
The FDD specifies that 'good cause' is generally limited to situations where the franchisee has failed to substantially comply with the lawful requirements imposed upon them by the franchise agreement. In such cases, Zoomin Groomin must provide the franchisee with at least 60 days' advance notice of the termination, as well as a reasonable opportunity to correct the issue. The opportunity to cure the failure cannot be less than 60 days from the date of the notice, and the period to exercise the right to cure cannot exceed 75 days unless there is a separate agreement to extend the time.
However, the FDD also outlines certain events that are considered so severe that immediate termination is deemed reasonable, without an opportunity to cure the issue. These events include, but are not limited to: the franchisee becoming subject to bankruptcy proceedings, abandoning the franchise, agreeing in writing to terminate the franchise, or making material misrepresentations related to the acquisition of the franchise or engaging in conduct that materially and unfavorably reflects upon the operation and reputation of the franchise business or system. These stipulations regarding 'good cause' are based on California Bus & Prof Code Section 20021, suggesting that these terms are influenced by California franchise law.