What is the timeframe for dismissing an involuntary bankruptcy petition against 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 Carvel's 2025 Franchise Disclosure Document, a franchisee has 60 days to dismiss an involuntary bankruptcy petition to avoid potential termination of their franchise agreement. Specifically, if a franchisee is the debtor in an involuntary bankruptcy petition that is not dismissed within 60 days, Carvel has grounds for termination.
This clause protects Carvel from the risks associated with a franchisee's financial instability. Bankruptcy can disrupt operations and damage the brand's reputation. By including this provision, Carvel aims to ensure that its franchisees maintain financial health and stability.
It's important for prospective Carvel franchisees to understand this requirement and have a plan in place to address any potential financial difficulties. Failing to resolve an involuntary bankruptcy petition within the specified timeframe could have serious consequences, including the loss of the franchise.