What happens if a receiver or trustee is appointed for a Bombs Away franchisee's business?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- (c) Without Cure Period. Bombs Away Franchising may terminate this Agreement by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee misrepresented or omitted material facts when applying to be a franchisee, or breaches any representation in this Agreement;
- (ii) Franchisee knowingly submits any false report or knowingly provides any other false information to Bombs Away Franchising;
- (iii) a receiver or trustee for the Business or all or substantially all of Franchisee's property is appointed by any court, or Franchisee makes a general assignment for the benefit of Franchisee's creditors, or Franchisee is unable to pay its debts as they become due, or a levy or execution is made against the Business, or an attachment or lien remains on the Business for 30 days unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or consented to by Franchisee and the petition is not dismissed within 45 days, or Franchisee is adjudicated as bankrupt;
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Bombs Away Franchising can terminate the franchise agreement without allowing the franchisee an opportunity to cure the breach if a receiver or trustee is appointed by any court for the franchisee's business or for all or substantially all of the franchisee's property. This also applies if the franchisee makes a general assignment for the benefit of their creditors, is unable to pay debts as they become due, or experiences a levy or execution against the business.
Additionally, Bombs Away can terminate the agreement without a cure period if an attachment or lien remains on the business for 30 days, unless the franchisee is duly contesting it in good faith. The same applies if the franchisee files a petition in bankruptcy, or if such a petition is filed against or consented to by the franchisee and not dismissed within 45 days, or if the franchisee is adjudicated bankrupt.
This clause protects Bombs Away by allowing them to quickly terminate agreements with franchisees facing severe financial distress, which could negatively impact the brand's reputation and financial stability. Franchisees should be aware of these conditions, as any of these events could lead to immediate termination of their franchise agreement without an opportunity to rectify the situation.