Under what insolvency-related conditions can 7 Brew, as the Owner, immediately terminate the agreement with the Manufacturer?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Owner may terminate this Agreement immediately:
- (i) If Manufacturer fails to perform or meet any material term or condition hereof, and has failed to cure such failure within thirty (30) days after the provision of written notice of such failure by Owner; provided, however, for any failure to perform that cannot be cured within such 30-day period it is agreed that Manufacturer shall not be in default hereunder so long as Manufacturer commences cure within such 30-day period and thereafter diligently pursues the same to completion within a reasonable period of time; or
- (ii) If Manufacturer becomes insolvent, a receiver is appointed to the possession of all or substantially all of Manufacturer's property, Manufacturer makes a general assignment for the benefit of creditors or files a voluntary petition in bankruptcy, or Manufacturer is the subject of an involuntary petition in bankruptcy and such involuntary petition is not dismissed within sixty (60) days of filing.
Source: Item 23 — RECEIPTS (FDD pages 83–279)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the Owner (franchisee) can immediately terminate the agreement with the Manufacturer under specific insolvency-related conditions. These conditions include if the Manufacturer becomes insolvent, meaning they are unable to pay their debts.
Another condition that would allow the Owner to terminate the agreement is if a receiver is appointed to take possession of all or substantially all of the Manufacturer's property. This usually happens when a company is in severe financial distress and a court appoints a receiver to manage the assets for the benefit of creditors.
The Owner can also terminate the agreement immediately if the Manufacturer makes a general assignment for the benefit of creditors, which is a voluntary transfer of assets to a trustee who then liquidates the assets and distributes the proceeds to creditors. Lastly, the Owner can terminate the agreement if the Manufacturer files a voluntary petition in bankruptcy, or if an involuntary petition in bankruptcy is filed against the Manufacturer and is not dismissed within sixty (60) days.