What is the timeframe for dismissing an assignment for the benefit of creditors for a Carvel franchisee to avoid termination?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
You: (i) become insolvent by reason of an inability to pay debts as they come due; (ii) are adjudicated bankrupt; (iii) file a petition for bankruptcy protection; (iv) are the debtor in an involuntary bankruptcy petition that is not dismissed within 60 days; (v) are the debtor in an assignment for the benefit of creditors that is not dismissed within 60 days; (vi) are the subject of a voluntary or involuntary petition for reorganization or similar proceeding that is not dismissed within 60 days; (vii) are the subject of a petition for appointment of a receiver, permanent or
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel Franchise Disclosure Document, a Carvel franchisee has 60 days to dismiss an assignment for the benefit of creditors to avoid potential termination of their franchise agreement.
Specifically, if a franchisee is the debtor in an assignment for the benefit of creditors, they must ensure that the assignment is dismissed within 60 days. Failure to do so constitutes grounds for Carvel to terminate the franchise agreement.
This requirement is in place to protect Carvel's interests by ensuring franchisees maintain financial solvency and stability. Financial distress, such as entering into an assignment for the benefit of creditors, can negatively impact the operation and reputation of the franchise. The 60-day window provides an opportunity for the franchisee to resolve the situation and avoid termination, while also setting a clear expectation for financial responsibility.
It is important for prospective Carvel franchisees to understand these financial obligations and ensure they have sufficient resources and business acumen to manage their finances effectively. Seeking professional financial advice and maintaining open communication with Carvel can help franchisees navigate any financial challenges and avoid potential default or termination of their franchise agreement.