What happens if a bankruptcy petition is filed against the Crave Cookies franchisee and is not dismissed?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Without Cure Period.
Crave Cookies Franchising may terminate this Agreement by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (iii) A receiver or trustee for the Business or all or substantially all of Franchisee's property is appointed by any court, or Franchisee makes a general assignment for the benefit of Franchisee's creditors, or Franchisee is unable to pay its debts as they become due, or a levy or execution is made against the Business, or an attachment or lien remains on the Business for 30 days unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or consented to by Franchisee and the petition is not dismissed within 45 days, or Franchisee is adjudicated as bankrupt;
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, the filing of a bankruptcy petition against a franchisee can lead to termination of the franchise agreement. Specifically, if a petition in bankruptcy is filed against the franchisee and is not dismissed within 45 days, Crave Cookies has grounds to terminate the agreement without offering a cure period.
This means that if a franchisee faces financial difficulties leading to a bankruptcy petition, they have a limited time frame (45 days) to resolve the issue and have the petition dismissed. Failure to do so gives Crave Cookies the right to end the franchise relationship. This could have significant financial implications for the franchisee, including loss of their business and potential liquidated damages.
Furthermore, if Crave Cookies terminates the franchise agreement due to the franchisee's default, the franchisee may be required to pay liquidated damages. These damages are calculated based on the average Royalty Fees and Marketing Fund Contributions owed to Crave Cookies for a specified period, multiplied by the lesser of 104 or the number of weeks remaining in the franchise term. This payment is in lieu of direct monetary damages for lost Royalty Fees and Marketing Fund Contributions but is in addition to other potential damages and injunctive relief.