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Do I have to file a Notice of Default within a certain amount of time for a breached franchise settlement agreement?

Chicago, IL |

I have a settlement agreement with a franchise that has agreed to return franchise fees I paid by 12/31. The owner called me and said he needs two more weeks to pay. The agreement states that they have 5 days to cure a default upon receipt of the notice of default. Do I have to send the notice of default right after the due date of 12/31 or can I give him the extra 2 weeks and send the notice mid January if he does not pay by then? I want to make sure this guy is not trying to weasel his way out of paying if I don't file within the required timeframe.

Attorney Answers 6

Posted

This is the type of thing that has to be considered in light of the contract language. It may or may not be a default for the other party to state that he "might" need more time. You need to see an attorney to answer this question.

Answering this question does not set up a attorney-client relationship between us. My comments do not constitute legal advice. If you would like to pursue representation, please contact me.

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Posted

No quality advice can be provided without a contract review.

Hire counsel and move to act upon your rigths.

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Posted

I agree with my colleagues:

You need to retain a lawyer to examine the relevant agreement, other documents and facts and advise you accordingly.

This information does not constitute legal advice and does not establish an attorney-client relationship.

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Posted

It's hard to give you guidance without having the full contract in front of me, but based on experience, notices of default and rights of defaulting party to cure must be followed strictly as set forth in the contract. Prematurely starting a lawsuit when there is a question as to proper notice might result in swift dismissal. Best to consult with a business or franchise attorney before taking action against the other party.

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Posted

An attorney review of agreement, and only then do you get actionable advice. Normally you follow the language strictly and send notices on time to preserve your rights. The extra time should normally be after the notice not before.

I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.

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1 comment

Neal Jonathan Blaher

Neal Jonathan Blaher

Posted

Just like your original agreement needed to be in writing, so would any modifications to that agreement. So you need to find an attorney to review the contract to assess your rights, and then draft the appropriate letter, amendment or other appropriate writing that best accomplishes your goal of payment under the circumstances without losing any of the rights you gained through the original settlement agreement.

Posted

As a franchise attorney familiar with these agreements and default notices, I agree with my colleagues.

Without reviewing the agreement, it's impossible to advise, but generally speaking this is how the process usually works. If the fees were not paid by Dec 31st, he is in default and you need to send a notice of default. It's important to follow the notice provisions exactly. For example, it may specify a certain address and method of delivery - like certified mail, etc. When the 5 day cure period starts is another issue that depends on the wording of the agreement. For example, it may (and usually does) start when he's received the default notice. Is it 5 calendar days or business days?

Bottom line is show the agreement to an attorney in your area, and don't delay. The default notice should go out right away if you haven't been paid.

Good luck,

Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Attorney & Franchise Expert
Director of Operations - Mr. Franchise
FRANCHISE FOUNDATIONS APC

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