What is the timeframe for dismissing an involuntary bankruptcy petition against a Belocal franchisee to avoid automatic termination?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- B. Automatic Termination. Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Franchisee if:
- (1) Franchisee becomes insolvent or makes a general assignment for the benefit of creditors;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee will be considered in default, leading to automatic termination without notice, if an involuntary bankruptcy petition is filed against them and not dismissed within 60 days after filing.
This clause in the franchise agreement means that if a third party files a bankruptcy petition against a Belocal franchisee, the franchisee has a limited time to resolve the situation. Failure to have the petition dismissed within the specified timeframe results in the automatic termination of the franchise agreement. This could have significant financial and operational consequences for the franchisee.
It is important for prospective Belocal franchisees to understand this provision and have a plan in place to address any potential financial difficulties that could lead to an involuntary bankruptcy filing. Franchisees should seek legal and financial advice to understand their rights and obligations in such a situation.