If an Amorino franchisee becomes insolvent, is that grounds for immediate termination?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. Termination Upon Notice In Certain Events. You shall be deemed to be in default under this Agreement, and we may terminate this Agreement and the franchise granted under this Agreement with immediate effect upon delivery of notice to you (without any opportunity to cure) upon the occurrence of any of the following events (each a "Default"):
- (1) You fail to make any payment due under this Agreement within 30 (thirty) days of when it is due.
- (2) You become insolvent, make a general assignment for the benefit of creditors, file a voluntary petition in bankruptcy, have an involuntary petition in bankruptcy filed against you which is not dismissed within 30 days after filing, are adjudicated as bankrupt or insolvent, suffer temporary or permanent court-appointed receivership of your assets or property, or any part thereof,
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, an Amorino franchise agreement can be terminated with immediate effect if the franchisee becomes insolvent. Specifically, if the franchisee makes a general assignment for the benefit of creditors, files a voluntary petition in bankruptcy, has an involuntary petition in bankruptcy filed against them which is not dismissed within 30 days, is adjudicated as bankrupt or insolvent, or suffers temporary or permanent court-appointed receivership of their assets or property, Amorino has grounds for immediate termination.
This means that if an Amorino franchisee faces severe financial difficulties leading to insolvency or bankruptcy, Amorino can terminate the franchise agreement without providing an opportunity to cure the default. This is a significant risk for franchisees, as financial instability can arise from various factors, including economic downturns or mismanagement.
It is important to note that Amorino's right to terminate the agreement immediately upon insolvency is a standard practice in franchising, as the financial stability of a franchisee can impact the brand's reputation and the overall network. Franchisees should carefully consider their financial resources and business planning to mitigate the risk of insolvency and potential termination.