Under the Angry Chickz franchise agreement, under what circumstances will the agreement automatically terminate without notice?
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 without notice under specific circumstances. These include situations where the franchisee is adjudicated bankrupt or judicially determined to be insolvent, admits inability to meet financial obligations, or makes a disposition for the benefit of creditors.
Additionally, the agreement can be automatically terminated if a judgment against the franchisee exceeding $25,000 remains unsatisfied for over 30 days, unless an appeal bond has been filed. Termination without notice also occurs if the franchised business, premises, or assets are seized by a government official, creditor, or lienholder, with a final judgment against the franchisee remaining unsatisfied for 30 days (unless an appeal bond has been filed). A levy of execution or attachment on the franchise license or assets that is not discharged within 5 days also triggers automatic termination.
Furthermore, allowing a mechanic's lien against the franchised business or equipment to remain unreleased for 60 days, or if any person commences action to foreclose on the franchised business or equipment, can lead to automatic termination. The agreement will also automatically terminate if the franchisee permits any judgment to be entered against Angry Chickz or its affiliates arising from the operation of the franchised business, or if a condemnation or transfer in lieu of condemnation has occurred.
These conditions highlight the importance of maintaining financial stability and adhering to legal and financial obligations to avoid automatic termination of the Angry Chickz franchise agreement. A prospective franchisee should carefully consider these terms and seek legal counsel to fully understand the implications.