In the event of termination for franchisee default, does Canine Dimensions have a lien against the franchisee's property?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee is in default under this Agreement, and all rights granted in this Agreement will automatically terminate without notice to Franchisee, if Franchisee, or any of Franchisee's partners, if Franchisee is a partnership, or any of its officers, directors, shareholders, or members, if Franchisee is a corporation or limited liability company, shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by Franchisee or such a petition is filed against and not opposed by Franchisee; if Franchisee is adjudicated a bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and consented to by Franchisee; if a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; if proceedings for a composition with creditors under any state or federal law should be instituted by or against Franchisee; if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond is filed); if Franchisee is dissolved; if execution is levied against Franchisee's business or property; if suit to foreclose any lien or mortgage against the premises of the Approved Location or equipment is instituted against Franchisee and not dismissed within thirty (30) days; or if the real or personal property of the Franchised Unit shall be sold after levy thereupon by any sheriff, marshal, or constable.
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Canine Dimensions may institute a suit to foreclose any lien or mortgage against the premises of the Approved Location or equipment instituted against the franchisee if not dismissed within thirty (30) days. Also, the franchise agreement will automatically terminate without notice to the franchisee if execution is levied against the franchisee's business or property.
This means that if a franchisee defaults and a lien or mortgage foreclosure suit is filed against their business premises or equipment, Canine Dimensions has grounds to terminate the franchise agreement if the suit is not dismissed within 30 days. Similarly, if a legal execution (a court order to seize assets) is levied against the franchisee's business or property, Canine Dimensions can terminate the agreement immediately.
These clauses protect Canine Dimensions by allowing them to disassociate from franchisees facing severe financial or legal troubles that could damage the brand's reputation or create liabilities. Franchisees should be aware of these conditions, as any financial instability leading to liens, foreclosures, or executions could result in the termination of their franchise agreement.