What constitutes an affirmative act of insolvency for a 360 Painting franchisee?

According to the 2025 FDD, an affirmative act of insolvency is a condition that can lead to the termination of the 360 Painting franchise agreement. Specifically, if a franchisee is deemed insolvent or commits an affirmative act of insolvency, it can trigger the termination clauses outlined in the agreement.

An affirmative act of insolvency includes actions that demonstrate the franchisee's inability to meet financial obligations. Other conditions that can trigger termination include filing any action or petition of insolvency; if a receiver of its property or any part thereof is appointed by a court; if it makes a general assignment for the benefit of its creditors; if a final judgment remains unsatisfied of record for thirty (30) days or longer (unless supersedeas bond is filed); if execution is levied against Franchisee's business or property; if a suit to foreclose any lien or mortgage against its Approved Location or equipment is instituted against Franchisee and not dismissed within thirty (30) days or is not in the process of being dismissed.

These stipulations are in place to protect the 360 Painting brand and ensure that franchisees are financially stable and capable of upholding their obligations. Prospective franchisees should understand these conditions and ensure they have a solid financial plan to avoid such situations. It is also important to maintain open communication with the franchisor if financial difficulties arise, as proactive measures may prevent termination of the agreement.