What is the timeframe for dismissing a bankruptcy petition filed against an Anago franchisee to avoid automatic termination of the agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Subject to applicable law, this Agreement automatically terminates without notice or opportunity to cure on the date of the occurrence of any of the following Events of Default:
- (i) if You damage the Anago System through violation of federal, state or local environmental laws;
- (ii) if You become insolvent or make a general assignment for the benefit of creditors;
- (iii) You file a petition in bankruptcy or a petition is filed against or consented to by You and the petition is not dismissed within 45 days;
- (iv) You are adjudicated as bankrupt;
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, if a bankruptcy petition is filed against an Anago franchisee, the franchisee has 45 days to have the petition dismissed. Failure to do so will result in automatic termination of the franchise agreement without notice or opportunity to cure the default.
This clause protects Anago from the risks associated with a franchisee's financial instability. Bankruptcy can disrupt operations and damage the brand's reputation, so Anago retains the right to terminate the agreement to mitigate these risks. The 45-day window provides a limited opportunity for the franchisee to resolve the bankruptcy petition, but it is a strict deadline.
It is important for prospective Anago franchisees to understand this termination clause and its implications. Franchisees should maintain sound financial practices and seek legal counsel if facing financial difficulties to avoid potential bankruptcy and subsequent termination of their franchise agreement. This is a fairly standard clause in franchise agreements, as franchisors need to protect their brand and system standards.