In the Angry Chickz franchise agreement, what happens if a franchisee is adjudicated bankrupt?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to Applicable Laws of the jurisdiction in which the Franchised Business is operated to the contrary, Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall at Company's election automatically terminate without notice to Franchisee if: (i) Franchisee shall be adjudicated bankrupt or judicially determined to be insolvent (subject to any contrary provisions of Applicable Law), shall admit to its inability to meet its financial obligations as they become due, or shall make a disposition for the benefit of its creditors
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, if a franchisee is adjudicated bankrupt, it constitutes an automatic default under the franchise agreement. Specifically, all rights granted to the franchisee under the agreement automatically terminate without any prior notice from Angry Chickz, subject to any applicable laws in the jurisdiction where the franchised business operates.
This clause means that if a franchisee declares bankruptcy or is legally determined to be insolvent, Angry Chickz has the right to immediately terminate the franchise agreement. The franchisee loses all rights to operate under the Angry Chickz brand and system. This automatic termination is a significant risk for franchisees, as it can occur without any opportunity to rectify the financial situation or negotiate with Angry Chickz.
Such provisions are relatively standard in franchise agreements to protect the franchisor's brand and ensure financial stability within the franchise system. Bankruptcy can indicate an inability to uphold brand standards or meet financial obligations, which could negatively impact the entire Angry Chickz network. Franchisees should be aware of this clause and carefully manage their financial affairs to avoid such a situation.