Court Watch

If a franchise agreement provides that the franchisee has a certain number of days to cure a default under the agreement, but the franchisee commits a violation that is impossible to cure, must the franchisor still wait the required number of days before the agreement is terminated? That question was before the Pennsylvania Supreme Court in LJL Transportation, Inc., et al v. Pilot Air Freight Corporation, CCH BFG 14,058 (Jan. 22, 2009). The concerned franchise agreement gave the franchisee 90 days from notice to cure a default, but the agreement did not contain a specific provision allowing immediate termination. After numerous acts of intentional misconduct by the franchisee, such as diverting business and underreporting sales, the franchisor sent a letter to the franchisee purporting to terminate the franchise agreement immediately, without providing the specified 90 days to cure the defaults. The franchisee argued that the franchisor breached the franchise agreement by terminating the agreement without giving the franchisee the specified time to cure. The franchisor maintained that cure would be impossible since the franchisee engaged in dishonest and improper conduct ' all violations of the terms of the franchise agreement ' and that those actions could not be undone.