What constitutes an 'assignment for the benefit of creditors' for a Big Air Trampoline Park franchisee?
Big_Air_Trampoline_Park Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Franchisee becomes insolvent or is adjudicated a bankrupt; or any action is taken by Franchisee, or by others against Franchisee under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit of creditors, or a receiver is appointed for Franchisee;
Source: Item 23 — RECEIPT (FDD pages 53–255)
What This Means (2025 FDD)
According to the 2025 Big Air Trampoline Park Franchise Disclosure Document, if a franchisee makes an assignment for the benefit of creditors, it constitutes an event of default. This is outlined in Section 17.1(d) of the agreement.
In practical terms, 'assignment for the benefit of creditors' typically refers to a situation where a franchisee, facing financial distress, voluntarily transfers their assets to a third party (the assignee). The assignee then liquidates these assets and distributes the proceeds to the franchisee's creditors in a predetermined order of priority. This action is often taken as an alternative to formal bankruptcy proceedings.
For a prospective Big Air Trampoline Park franchisee, this clause means that if they reach a point where they can no longer manage their debts and choose to assign their assets for the benefit of creditors, Big Air Trampoline Park has the right to terminate the franchise agreement. This could result in the franchisee losing their business and the rights associated with the franchise. It's crucial for franchisees to maintain financial stability and seek professional advice if they encounter financial difficulties to avoid such a situation.