Under what conditions will Big O Tires terminate the ASSIGNOR'S Franchise Agreement?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
nment to ASSIGNEE of the Big O Tires Store, including without limitation, the right to operate under BIG O's system and trademarks pursuant to the BIG O Franchise Agreement ("Franchise Agreement");
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- Franchise Agreement. ASSIGNEE, by execution of this Agreement, expressly agrees to execute a new Franchise Agreement with BIG O, and ASSIGNEE represents that they have received a copy of BIG O's Franchise Disclosure Document, together with Exhibits, at least seven (7) business days prior to the execution of this Agreement, and acknowledge that, as of the Closing Date, the Franchise Agreement between ASSIGNOR and BIG O shall terminate and be of no further force or effect.
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- Conditions Precedent.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to the 2025 Big O Tires Franchise Disclosure Document, the Franchise Agreement between the assignor and Big O Tires will terminate when the assignee executes a new Franchise Agreement with Big O Tires. This is contingent upon the assignee receiving a copy of Big O Tires' Franchise Disclosure Document, along with exhibits, at least seven business days before executing the new agreement.
Big O Tires will also withdraw its agreement and consent to the assignment if the assignor fails to pay any shortfall of amounts due and owing to Big O Tires. This includes amounts due under the Franchise Agreement or any other agreement the assignor or guarantors have with Big O Tires related to the store. Big O Tires also reserves the right to collect any amounts due upon final reconciliation of the assignor's accounts, even after the effective date, and the assignor and guarantors must pay these amounts upon demand. Failure to pay upon demand also allows Big O Tires to withdraw its consent to the assignment.
In the context of franchise transfers, these conditions are fairly standard. Franchisors like Big O Tires typically want to ensure a smooth transition with all financial obligations settled and the new franchisee committed to the current franchise terms. The seven-day review period for the FDD is a legal requirement, giving the assignee time to consider the agreement. The financial stipulations protect Big O Tires from outstanding debts and ensure continued revenue flow.