What happens if a Crave Cookies franchisee is adjudicated as bankrupt?
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, if a franchisee is adjudicated as bankrupt, Crave Cookies has the right to terminate the franchise agreement without providing an opportunity to cure the breach. This means that upon being declared bankrupt by a court, the franchisee immediately risks losing their franchise.
This provision protects Crave Cookies from the potential financial and reputational risks associated with a franchisee's bankruptcy. Bankruptcy can indicate financial instability and poor management, which could negatively impact the Crave Cookies brand and its other franchisees. By including bankruptcy as a cause for immediate termination, Crave Cookies aims to maintain the integrity and stability of its franchise system.
For a prospective Crave Cookies franchisee, this clause highlights the importance of maintaining sound financial management and avoiding circumstances that could lead to bankruptcy. It underscores the need for a robust business plan, careful financial planning, and proactive management of financial risks. Franchisees should seek professional financial advice and ensure they have adequate resources to manage their business effectively and meet their financial obligations. This is a fairly standard clause in most franchise agreements.