What to do after a franchise notice of default

A plain-English walk through the first days after a default notice: read it, find the contract sections it cites, check the dates and delivery method, and see what your state's law says.

A notice of default is usually the franchisor's formal written statement that it says you have broken the franchise agreement. What it means for you depends on two things that no website can see: the wording of your own notice and the wording of your own franchise agreement. This page sets out what the published sources say about the first steps, and where each step comes from. It is general information, not legal advice, and a lawyer licensed in your state can advise on your own dates.

One framing point from the Federal Trade Commission. In its consumer guide the FTC says a franchisor can end an agreement "for a variety of reasons, including your failure to pay royalties or abide by performance standards and sales restrictions," and that many contracts "will give you a chance to 'cure' an occasional failure to comply (like making one late payment) but keep the right to terminate your franchise for other failures." It also warns that "If your franchise is terminated, you're likely to lose your entire investment." The guide is written for people buying a franchise, but those lines describe the stakes plainly.

The first steps, in order

No government source sets out a checklist for a franchisee who has just received a default notice. The steps below combine what the FTC guide, the federal Item 17 rule and an article posted on the International Franchise Association website say. That article was written by two private franchise lawyers from the franchisor-practice side, so it reflects their view, not a rule of law.

  1. Read the whole notice slowly, including any attachments. Note the date on it, the date you actually received it, and how it was delivered (hand delivery, courier, certified mail, email). Franchise agreements commonly list the delivery method, address and timing as notice requirements, and the notice and the agreement control the dates.
  2. Find the agreement section the notice cites. The IFA-hosted article says a default notice should cite the franchise agreement section and list the facts. If the notice does not point to a section, that is worth writing down for a lawyer.
  3. Look for what the notice says it would take to cure, and the cure period it gives. The same article says a notice "should also specify exactly what is required for a cure" and that the notice must provide the appropriate cure period "whether dictated by the franchise agreement or by state statute."
  4. Check whether the notice calls the default incurable. The article says that if a franchisor treats a default as non-curable, "the notice should explicitly state that fact."
  5. Pull out the sections of your franchise agreement on default, cure, termination, notice, dispute resolution and post-termination obligations. Item 17 of your Franchise Disclosure Document summarizes these in a table, and the rule tells readers to read the actual provisions in the attached agreements.
  6. Find out whether your state has a franchise relationship law. Some states set minimum notice, a cure right or a good-cause requirement that sits on top of the contract.
  7. Speak to a lawyer licensed in your state, and do it early enough that the notice's dates are still ahead of you.

Why the dates come first

Every later question depends on the clock in your notice. A notice may describe a cure period, a termination date, or both. State statutes can add their own minimums: Minnesota's statute, for example, says a franchise may not be terminated unless written notice of all reasons was given at least 90 days ahead and the recipient fails to correct the reasons within 60 days of receipt, while California's says notice at least 60 days in advance and a cure opportunity "which in no event shall be less than 60 days from the date of the notice of noncompliance." Those are statutory rules for franchises that fall inside those statutes. They do not tell you your own cure period, which is whatever your notice, your agreement and your state's law together provide. The article on how cure periods work sets out the statutory figures that are sourced.

The agreement also governs how repeated notices are treated. The IFA-hosted article says franchisees want to avoid accumulating formal default notices because repeated violations can later support an incurable default under the agreement's termination provisions. The guide on cross-default and repeated default covers that mechanism in more detail.

What the franchisor-side lawyers advise

The IFA-hosted article advises a franchisee facing a default warning "to take the threat very seriously and to make every reasonable effort to cure the alleged deficiency." It adds that a franchisee should document compliance efforts in writing and, if money is the problem, "document any agreement in writing, and then, to stick to the agreed schedule." This is the authors' advice, not a statutory requirement, and whether a given step suits your situation is a question for your own lawyer.

The article also warns about what happens after a termination takes effect. It describes operating without "the protection of an injunction" as very dangerous and says notices should warn of Lanham Act infringement if the franchisor's trademarks are used after termination. That is the authors' characterization. The sourced federal law is that using a registered mark without the owner's consent in a way likely to cause confusion can lead to a civil action under 15 U.S.C. 1114 (checked 28 October 2026). Whether any of that applies to you turns on your termination date and your agreement. The guide on using the brand after termination goes through it.

Documents to gather, and finding a lawyer

A lawyer will normally want the notice and its envelope or email header, the full franchise agreement with all amendments, the Franchise Disclosure Document you received, recent royalty and fee statements, and any correspondence with the franchisor about the issue named in the notice. The guide on documents to gather after a default notice has a fuller list.

On the choice of lawyer, the FTC guide says "A lawyer can help you understand your obligations under the franchise contract" and to "Choose a lawyer who is experienced in franchise matters." The American Bar Association says each state has its own agency that handles complaints about lawyers, and that its FindLegalHelp site includes a section for finding out whether a person is licensed as a lawyer in your state. The ABA states that it cannot refer you to an attorney. This site does not recommend or rank any firm. For help checking a license and preparing for a first call, see how to check a lawyer's license and questions for a first consultation.

If you already have a notice in hand, the check your notice page lists what a default or termination notice normally states and the questions to look for in your own.

Where this came from

Read next

Check your notice