What constitutes a material default for a Baya Bar franchise that leads to automatic termination?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
17.1 Default and Automatic Termination. Franchisee shall be deemed to be in material default under this Agreement, and all rights granted herein shall automatically terminate without notice to Franchisee, if Franchisee shall become insolvent or makes a general assignment for the benefit of creditors; or if Franchisee files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof, or admits in writing its inability to pay its debts when due; or if Franchisee is adjudicated a bankrupt or insolvent in proceedings filed against Franchisee under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state; or if a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and consented to by Franchisee; or if a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings
for a composition with creditors under any state or federal law should be instituted by or against Franchisee; or if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond is filed); or if Franchisee is dissolved; or if execution is levied against Franchisee's business or property; or if suit to foreclose any lien or mortgage against the Franchised Business premises or equipment is instituted against Franchisee and not dismissed within thirty (30) days.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to the 2024 Baya Bar Franchise Disclosure Document, a franchisee will be considered in material default of their franchise agreement, leading to automatic termination without notice, under specific circumstances related to financial solvency and legal judgments.
These circumstances include if the franchisee becomes insolvent or makes a general assignment for the benefit of creditors. It also includes filing a voluntary petition under federal bankruptcy law or admitting in writing the inability to pay debts when due. Furthermore, being adjudicated bankrupt or insolvent in proceedings filed against the franchisee, consenting to the appointment of a receiver, or having a receiver appointed by a court can trigger automatic termination.
Additionally, if proceedings for a composition with creditors are instituted by or against the franchisee, if a final judgment remains unsatisfied for thirty days or longer (unless a supersedeas bond is filed), if the franchisee is dissolved, if execution is levied against the franchisee's business or property, or if a suit to foreclose any lien or mortgage against the franchised business premises or equipment is instituted against the franchisee and not dismissed within thirty days, the franchise agreement will be terminated automatically.