Is insolvency of the franchisee a cause for termination of the Antioch Pizza Shop franchise?
Antioch_Pizza_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary | |
|---|---|---|---|
| Franchise or Other Agreement | |||
| v. Choice of forum | Section 25 | Subject to applicable state law, Chicago, Illinois. | |
| w. Choice of law | Section 24 | Subject to applicable state law, Illinois law applies, subject to the Lanham Act. | |
| Provision | Section in MUDA | Summary | |
| a. Length of term of the agreement | Section 4 | Agreement expires on our acceptance and execution of the Franchise Agreement for the last franchise to be developed. | |
| b. Renewal or extension of the | None | Not applicable | |
| term | |||
| c. Requirements for you to | None | Not applicable | |
| renew or extend | |||
| d. Termination by you | None | Not applicable, | |
| e. Termination by us without | None | Not applicable | |
| cause | |||
| f. Termination by us with cause | Section 7 | We can terminate if you commit a listed violation. | |
| g. "Cause" defined - defaults | Section 7 | Not applicable | |
| which can be cured | |||
| h. "Cause" defined - defaults which cannot be cured | Section 7.2 | Bankruptcy or similar proceeding, failure to comply with development schedule, breach of the agreement, unauthorized transfer, dissolution of Developer or death of owner, breach of franchise agreement and failure to cure. | |
| i. Your obligations on | Section 7.4 | No further right to develop; however, | |
| termination/ | termination does not affect existing | ||
| non-renewal | franchise agreements. | ||
| j. Assignment of contract by us. | Section 8.1 | We have an unrestricted right to assign. | |
| k. "Transfer" by you – definition | Section 8.2 | Include transfer of any interest in the MUDA or in the Developer. | |
| Provision | Section in Franchise or Other Agreement | Summary | |
| h. | "Cause" defined- non curable defaults | Section 16(a); Par. 14 and 15 of the Food Truck/Trailer Addendum | Material misrepresentations or omissions in the franchise application or in any report you submit to us; voluntary abandonment of the Franchise Agreement or the Antioch Pizza Shop Business; attempts to make an unauthorized assignment, encumbrance, or other transfer of our rights under the Franchise Agreement; your entry into an agreement with us or our affiliates other than the Franchise Agreement that is terminated because of your breach of that separate agreement; the loss of your lease for the Antioch Pizza Shop Business; the failure to timely cure a default under your lease for the Antioch Pizza Shop Business; the closing of the Antioch Pizza Shop Business by any state or local authorities for health or public safety reasons; any unauthorized use of confidential information; insolvency of you, a principal owner, a control person, or guarantor; making an assignment or entering into any similar arrangement for the benefit of creditors; any default under the Franchise Agreement that materially impairs the goodwill associated with any of our trademarks, trade names, and related intellectual property; any conviction of or pleading no contest by you, a principal owner, a control person, or guarantor to any felony regardless of the nature of the charges, or any misdemeanor that brings or tends to bring any of our trademarks and trade names into disrepute or impairs or tends to impair your reputation or the goodwill of the trademarks, trade names, or franchise; your unauthorized use of any of our trademarks, trade names, or other intellectual property; the seizure, takeover, or foreclosure of the franchise or its assets by a governmental official acting in an official capacity, or by any of your creditors, lienholders or lessors, or if a writ of levy of execution is issued against the franchise or your assets; |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 41–48)
What This Means (2025 FDD)
According to the 2025 Antioch Pizza Shop Franchise Disclosure Document, franchisee insolvency is a cause for termination. Specifically, if the franchisee, a principal owner, a control person, or a guarantor becomes insolvent, Antioch Pizza Shop has grounds to terminate the franchise agreement. This is considered a non-curable default, meaning the franchisee does not have an opportunity to correct the situation to avoid termination.
This provision protects Antioch Pizza Shop from the potential negative impacts of a franchisee's financial instability. Insolvency can lead to poor operational standards, inability to pay suppliers, and damage to the brand's reputation. By including insolvency as a cause for termination, Antioch Pizza Shop maintains control over its brand and network quality.
For a prospective franchisee, this highlights the importance of maintaining financial stability. It also underscores the need to carefully consider the financial risks associated with operating a franchise. The franchisee should have a solid financial plan and sufficient capital to weather potential economic downturns or unexpected expenses. Furthermore, the franchisee should be aware that personal financial issues could also impact the franchise agreement if they are a principal owner, control person, or guarantor.