What happens if a Crave franchisee becomes insolvent or makes a general assignment for the benefit of creditors?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.1.8 If any of you shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by you or such a petition is filed against and not opposed by you; if you are adjudicated a bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver or other custodian for you or your business or assets is filed and consented to by you; if a receiver or other custodian (permanent or temporary) of your 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 you; if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless a supersedeas bond is filed); if execution is levied against your business or property; if suit to foreclose any lien or mortgage against the premises or equipment is instituted against you and not dismissed within thirty (30) days; or if the real or personal property of the business shall be sold after levy thereupon by any sheriff, marshal, or constable.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, if a franchisee becomes insolvent or makes a general assignment for the benefit of creditors, it constitutes a breach of the franchise agreement. Specifically, Item 9.1.8 states that such actions can lead to the termination of the franchise agreement.
This section outlines several scenarios that would trigger this clause, including the franchisee filing for bankruptcy, being adjudicated bankrupt or insolvent, consenting to the appointment of a receiver for their business assets, or failing to satisfy a final judgment within thirty days. The same consequences arise if proceedings for composition with creditors are instituted by or against the franchisee, or if the franchisee's business assets are sold after levy by a sheriff, marshal, or constable.
For a prospective Crave franchisee, this means that maintaining financial stability is crucial. Any of the listed insolvency events could lead to the loss of the franchise. Franchisees should be aware of these conditions and take steps to avoid financial distress to protect their investment and business operation. It is important to note that the franchisor can terminate the agreement if any of these events occur, potentially resulting in the franchisee losing their business and investment.