What constitutes a default that leads to automatic termination of the Deer Solution franchise agreement if a franchisee makes a general assignment for the benefit of creditors?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
16.A. DEFAULTS BY FRANCHISEE AND TERMINATION BY FRANCHISOR
- (1) Defaults and Automatic Termination Franchisee shall be in default of this Agreement, and, this Agreement shall be automatically and immediately terminated, without notice to Franchisee and without providing Franchisee any opportunity to cure, upon the occurrence of any one or more of the following actions, inactions, omissions, events, and/or circumstances:
- (a) Franchisee becomes insolvent, and/or Franchisee makes a general assignment for the benefit of creditors or takes any other similar action for the protection or benefit of creditors;
- (b) Franchisee admits in writing Franchisee's inability to pay its debts as they mature, and/or Franchisee gives notice to any governmental body or agency of insolvency, pending insolvency, suspension of operations and/or pending suspension of operations;
- (c) Franchisee files a voluntary petition in bankruptcy, Franchisee is adjudicated bankrupt or insolvent, and/or Franchisee files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or other similar relief under any applicable federal and/or state law relative to bankruptcy, insolvency, or similar relief for debtors;
- (d) An involuntary petition in bankruptcy is filed against Franchisee and Franchisee fails to have the involuntary petition discharged within 35 days of the petition filing, and/or Franchisee seeks, consents to, or acquiesces in, the appointment of any trustee, receiver, conservator, custodian or liquidator for Franchisee's business or any assets of Franchisee;
- (e) A bill in equity or other proceeding for the appointment of any trustee, receiver, conservator, custodian or liquidator of Franchisee or Franchisee's business or any assets of Franchisee is filed and Franchisee consents to same;
- (f) A court of competent jurisdiction appoints or orders any trustee, receiver, conservator, custodian or liquidator for Franchisee's business or any assets of Franchisee and such appointment or order remains for an aggregate of 60 days, whether or not consecutive, from
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to the 2025 Deer Solution Franchise Disclosure Document, if a franchisee becomes insolvent or makes a general assignment for the benefit of creditors, the franchise agreement will be automatically and immediately terminated. This termination occurs without any prior notice to the franchisee and without providing any opportunity to remedy the situation. This is a significant point for prospective franchisees to consider, as it means that certain financial difficulties can lead to immediate loss of the franchise.
This clause also extends to other related financial distress scenarios. The agreement is automatically terminated if the franchisee admits in writing their inability to pay debts, notifies any governmental body of insolvency or pending suspension of operations, or files a voluntary petition in bankruptcy. Similarly, if an involuntary bankruptcy petition is filed against the franchisee and not discharged within 35 days, or if the franchisee seeks or consents to the appointment of a trustee or receiver, the agreement is immediately terminated.
Furthermore, the appointment of a trustee, receiver, conservator, custodian, or liquidator by a court of competent jurisdiction for the franchisee's business or assets also results in automatic termination if such appointment remains in effect for an aggregate of 60 days, whether or not consecutive. These conditions highlight the critical importance of maintaining financial stability and avoiding circumstances that could lead to insolvency or bankruptcy, as the consequences include immediate loss of the Deer Solution franchise.