If an Angry Chickz franchisee admits inability to meet financial obligations, what happens?
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 Angry Chickz's 2025 Franchise Disclosure Document, if a franchisee admits to being unable to meet their financial obligations as they become due, Angry Chickz has the right to automatically terminate the Franchise Agreement without providing any prior notice. This is subject to applicable laws in the jurisdiction where the franchised business operates.
This clause in the franchise agreement protects Angry Chickz from further financial risk associated with a franchisee who is likely to default on their financial commitments. It allows Angry Chickz to promptly regain control of the franchise and find a more financially stable operator. The franchisee's admission of inability to meet financial obligations triggers an immediate termination, preventing further accumulation of debt or damage to the Angry Chickz brand.
For a prospective Angry Chickz franchisee, this highlights the critical importance of maintaining sound financial health and carefully managing cash flow. Franchisees need to have sufficient capital and a robust business plan to ensure they can meet their financial obligations. The automatic termination clause underscores the potential consequences of financial instability, emphasizing the need for prudent financial management and realistic financial projections before entering into the franchise agreement. Franchisees should also be aware of any applicable laws in their jurisdiction that might affect this clause.
It is important to note that this is just one of several conditions that can lead to automatic termination. Other conditions include bankruptcy, significant unsatisfied judgments, seizure of assets, and failure to discharge mechanic's liens. Franchisees should carefully review all termination clauses in the Franchise Agreement to fully understand their obligations and the potential consequences of non-compliance.