What constitutes insolvency for an All States M.E.D. franchisee that could lead to termination?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
CALIFORNIA ADDENDUM TO THE FRANCHISE AGREEMENT
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below control.
Section 16.2 is deleted and in its place are substituted the following:
- 16.2.1 Termination by Us Without Right to Cure. We may terminate this Agreement without notice and the opportunity to cure for any of the following reasons:
- (a) The franchisee or the business to which the franchise relates has been judicially determined to be insolvent, all or a substantial part of the assets thereof are assigned to or for the benefit of any creditor, or the franchisee admits his or her inability to pay his or her debts as they come due;
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, specific conditions constituting franchisee insolvency that may lead to termination are outlined in the California Addendum. If any terms of the Franchise Agreement are inconsistent with the addendum, the terms in the addendum will control.
Specifically, All States M.E.D. may terminate the agreement without the opportunity to cure if the franchisee or the business is judicially determined to be insolvent. Termination can also occur if a substantial part of the franchisee's assets are assigned to, or for the benefit of, any creditor. Another cause for termination without opportunity to cure is if the franchisee admits their inability to pay debts as they come due.
This clause is particularly important for prospective franchisees in California, as it modifies the standard termination clauses of the franchise agreement. Franchisees should be aware of these specific insolvency-related conditions that could lead to immediate termination without an opportunity to rectify the situation. Franchisees outside of California should consult their local addendum, if applicable, to determine if similar clauses exist.