What constitutes insolvency for a Cd One Price Cleaners franchisee that would trigger automatic termination?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.1 Termination Upon Occurrence of Bankruptcy or Insolvency. Franchisee shall be deemed to be in default hereunder, and all rights granted herein shall automatically terminate without notice to Franchisee, if Franchisee or its direct or indirect owner shall become insolvent or makes a general assignment for the benefit of creditors; or, if a petition in bankruptcy is filed by Franchisee or its direct or indirect owner or such a petition is filed against and not opposed by Franchisee or such owner, if Franchisee is adjudicated as bankrupt or insolvent; or, if a bill in equity or other proceeding for the appointment of a receiver of Franchisee or its direct or indirect owner or other custodian for Franchisee's or such owner's business or assets is filed and consented to by Franchisee or such owner; or, if a receiver or other custodian (permanent or temporary) of Franchisee's or its direct or indirect owner'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 Franchisee or its direct or indirect owner; or, if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless a superseding bond is filed); or, if Franchisee is dissolved; or, if execution is levied against Franchisee's or its direct or indirect owner's business or property; or, if the real or personal property of the Store shall be sold after levy thereupon by any sheriff, marshal or constable.
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to Cd One Price Cleaners' 2025 Franchise Disclosure Document, several conditions related to insolvency or financial distress can trigger an automatic termination of the franchise agreement without notice. These conditions include the franchisee becoming insolvent or making a general assignment for the benefit of creditors.
Specifically, the agreement is automatically terminated if a bankruptcy petition is filed by the franchisee or against the franchisee (and not opposed), or if the franchisee is adjudicated bankrupt or insolvent. Similarly, the appointment of a receiver or custodian for the franchisee's business or assets, with the franchisee's consent, also results in automatic termination. The same applies if proceedings for a composition with creditors are instituted by or against the franchisee.
Furthermore, if a final judgment remains unsatisfied for 30 days or longer (unless a superseding bond is filed), if the franchisee is dissolved, if execution is levied against the franchisee's business or property, or if the real or personal property of the store is sold after levy by a sheriff, marshal, or constable, the franchise agreement is automatically terminated. These stipulations are designed to protect Cd One Price Cleaners from the risks associated with a franchisee's financial instability, ensuring the brand's reputation and operational standards are not compromised.