If an Angry Chickz franchisee is adjudicated bankrupt, does the franchise agreement automatically terminate?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
d holders shall reexecute a written guaranty in a form prescribed by Company.
ARTICLE 14 DEFAULT AND TERMINATION
- 14.1 General. Company shall have the right to terminate this Agreement only for "cause". "Cause" is hereby defined as a default of this Agreement. Company shall exercise its right to terminate this Agreement in the following circumstances and manners.
- 14.2 Automatic Termination Without Notice. 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; (ii) a judgment against Franchisee in the amount of more than $25,000 remains unsatisfied for a period of more than 30 days (unless an appeal bond has been filed); (iii) the Franchised Business, the Premises, or any of the Assets are seized, taken over or foreclosed by a government official in the exercise of its duties, or seized, taken over, or foreclosed by a creditor or lienholder provided that a final judgment against the Franchisee remains unsatisfied for 30 days (unless an appeal bond has been filed); (iv) a levy of execution or attachment has been made upon the license granted by this Agreement or upon any of the Assets, and it is not discharged within 5 days of such levy or attachment; (v) Franchisee permits any recordation of a notice of mechanics lien against the Franchised Business or
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, the franchise agreement can automatically terminate if the franchisee is adjudicated bankrupt. Specifically, if a franchisee is adjudicated bankrupt or judicially determined to be insolvent, Angry Chickz has the option to automatically terminate the agreement without notice. However, this is subject to applicable laws of the jurisdiction in which the franchised business is operated.
This means that if an Angry Chickz franchisee declares bankruptcy, Angry Chickz has the right to immediately terminate the franchise agreement. The franchisee would lose the right to operate under the Angry Chickz brand. This clause protects Angry Chickz from potential financial and reputational damage that could arise from a franchisee's bankruptcy.
It is important to note the clause regarding 'Applicable Laws'. This means that local laws could override the automatic termination clause, potentially requiring Angry Chickz to provide notice or an opportunity to cure the default, even in the event of bankruptcy. Prospective franchisees should consult with a legal professional to understand how these laws might apply in their specific jurisdiction.