What happens to the rights granted to the Developer in the Bojangles Development Agreement if they are in default?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Developer shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Developer, if Developer shall become insolvent or make a general assignment for the benefit of creditors; or if a petition in bankruptcy is filed by Developer or such a petition is filed against Developer and not opposed by Developer; or if Developer is adjudicated a bankrupt or insolvent; or if a bill in equity or other proceeding for the appointment of a receiver of Developer or other custodian for Developer's business or assets is filed and consented to by Developer; or if a receiver or other custodian (permanent or temporary) of Developer'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 Developer.
C. Upon occurrence of any of the following events, Developer shall be deemed to be in default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording Developer any opportunity to cure the default, effective immediately upon receipt of notice by Developer, or instead of terminating Developer, Franchisor may, at its discretion, elect any of the remedies set forth in Paragraph VIII.E. hereof:
(1) If Developer fails to comply with the Development Schedule with respect to any Restaurant to be developed within the time specified in the Development Schedule;
(2) If Developer or any shareholder or member of Developer is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that is reasonably likely, in the sole opinion of Franchisor, adversely to affect the System, the Proprietary Marks or the Trade Dress, the goodwill associated therewith, or Franchisor's interest therein;
Source: Item 23 — RECEIPTS (FDD pages 82–573)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, the consequences for a Developer in default vary depending on the nature of the default. If the Developer becomes insolvent, makes an assignment for the benefit of creditors, files for bankruptcy (or does not oppose an involuntary petition), is adjudicated bankrupt or insolvent, consents to the appointment of a receiver, or institutes proceedings for composition with creditors, all rights granted under the Development Agreement automatically terminate without notice. This represents a severe outcome, as the Developer immediately loses all development rights without any chance to rectify the situation.
In other instances of default, Bojangles has the option to terminate the Development Agreement. These instances include failure to comply with the Development Schedule, or if the Developer or any shareholder/member is convicted of a felony or a crime that could adversely affect the Bojangles system. In these cases, Bojangles may terminate the agreement and all rights granted immediately upon notice, without providing an opportunity to cure the default. Alternatively, Bojangles can choose other remedies, such as terminating territorial exclusivity, terminating all agreements with the Developer (requiring them to cease operations and de-identify restaurants), or terminating the Development Agreement while allowing the Developer to continue operating existing restaurants if they comply with the franchise agreements.
Bojangles also has the option to purchase the assets of all restaurants opened by the Developer under specific circumstances, such as an unapproved transfer of interest in the agreement or assets. The Development Agreement specifies a process for providing notice and allowing Bojangles to exercise its right to purchase the seller's interest on the same terms offered by a third party. These detailed stipulations in the Development Agreement highlight the importance of adhering to the terms and conditions to avoid potential default and the loss of development rights. Prospective developers should carefully review these default provisions and ensure they have the financial stability and operational capabilities to meet the obligations outlined in the agreement.