What happens if a 1-800-GOT-JUNK? franchisee ceases their corporate existence?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Provision Section in Franchise Agreement Summary h. “Cause” defined – defaults which cannot be cured 17.2; 17.3 Three or more curable defaults within a 12- month period; failure to commence operation by the scheduled opening date; if you cause the Franchised Business to be closed or not operating for five business days in any 30 consecutive day period without our prior consent; failure to assign within required timeframe after death or permanent disability; termination of or failure to remain in good standing under all vehicle leases; failure to comply with Security Agreement; you become insolvent or become bankrupt; you cease your corporate existence; unauthorized assignment; you lose possession without release of any items of personal property used in the Franchised Business; failure to satisfy judgment entered against you; you
Source: Item 16 — Restrictions On What the Franchisee May Sell (FDD pages 38–42)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, if a franchisee ceases their corporate existence, it constitutes a default that cannot be cured. This is explicitly stated as a condition under which 1-800-GOT-JUNK? can terminate the franchise agreement with cause.
This provision is significant for prospective franchisees because it highlights the importance of maintaining the legal and corporate standing of their business. Failure to do so can lead to immediate termination of the franchise agreement, resulting in the loss of the franchise and potentially any investments made into the business. Franchisees should ensure they understand and comply with all legal and corporate requirements to avoid such a situation.
In addition to the termination of the franchise agreement, 1-800-GOT-JUNK? outlines several obligations the franchisee must adhere to upon termination. These include discontinuing operations, arranging for payment of all accounts via bank draft, returning all items belonging to 1-800-GOT-JUNK?, transferring telephone numbers, immediately ceasing the use of 1-800-GOT-JUNK?'s marks, and complying with non-competition provisions. Furthermore, within 60 days, the franchisee must either sell the dump body truck boxes to another 1-800-GOT-JUNK? franchisee or destroy them. 1-800-GOT-JUNK? also retains the option to purchase some or all of the assets of the franchised business at fair market value, determined either by agreement or appraisal.