If a Deer Solution franchisee becomes insolvent, is the franchise agreement automatically terminated?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
ion;
- (r) Franchisee misappropriates, misuses, or makes any unauthorized use of the Licensed Marks, the Confidential Information, and/or the System and/or Franchisee materially impairs the goodwill associated with the Licensed Marks, and/or Franchisee applies for registration of the Licensed Marks anywhere in the world; and/or
- (s) Franchisee and/or an Owner fails to comply with Anti-Terrorism Laws or becomes listed on the Annex to Executive Order 13244.
- (3) Defaults and Automatic Termination After 10 Day Cure Period Franchisee shall be in default of this Agreement and, this Agreement shall be terminated, upon the occurrence of any one or more of the following actions, inactions, omissions, events, and/or circumstances, unless, Franchisee timely cures, to the satisfaction of Franchisor, such default / action, inaction, omission, event, and/or circumstance within 10 calendar days of Franchisor's written notice:
- (a) Franchisee fails, refuses, and/or is unable to timely pay and/or satisfy the Royalty Fee, Advertising Contribution, and/or any other payment, fee, financial obligation, charge, and/or monetary obligation payable and/or due to Franchisor pursuant to the terms of this Agreement, under this Agreement, and/or any other agreement between Franchisor and Franchisee;
- (b) Franchisee and/or Franchisee's affiliate fails, refuses, and/or is unable to pay and/or satisfy any payment, fee, financial obligation, charge, and/or monetary obligation payable to Franchisor and/or Franchisor's affiliates pursuant to this Agreement and/or any other agreement between or among Franchisor, Franchisor's affiliate, Franchisee and/or Franchisee's affiliate; and/or
- (c) Franchisee fails or refuses, at any time, and, without legal justification as may be determined by Franchisor in Franchisor's Reasonable Business Judgment, to pay any third party supplier or vendor for any goods, products, supplies, equipment, materials and/or any other items used by, benefitting, and/or intended to benefit the Franchised Business.
The foregoing events of default set forth in this Article 16.A.(3) shall exclude events of default that are otherwise governed by and/or constitute events of default under Article 16.A.(1) or Article 16.A.(2). In the event of any inconsistency or conflict between the provisions of this Article 16.A.(3) with Article 16.A.(1), Article 16.A.(1) shall take precedence and govern.
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
Based on the 2025 Deer Solution Franchise Disclosure Document, the franchise agreement can be terminated if a franchisee defaults, but it does not specify insolvency as an automatic trigger for termination. The agreement outlines several conditions that constitute default, which can lead to termination if not cured within a 10-day period after written notice from Deer Solution. These conditions include a felony conviction, unethical conduct that embarrasses the brand, failure to complete training, breaches of confidentiality, unauthorized use of licensed marks or confidential information, and failure to comply with anti-terrorism laws.
Specifically, the Deer Solution franchise agreement states that upon the occurrence of certain actions, inactions, omissions, events, and/or circumstances, the franchisee will be considered in default. If the franchisee does not address and resolve the default to Deer Solution's satisfaction within 10 calendar days of receiving written notice, the agreement can be terminated. This 10-day cure period suggests that Deer Solution provides an opportunity for franchisees to rectify certain defaults before proceeding with termination.
While the FDD does not explicitly mention insolvency as a cause for automatic termination, it is important for a prospective franchisee to understand the full range of conditions that could lead to a default and subsequent termination of the agreement. A potential franchisee should carefully review the franchise agreement and consult with legal counsel to fully understand their rights and obligations, including the circumstances under which Deer Solution can terminate the agreement. It would be prudent to ask Deer Solution directly about how insolvency or bankruptcy would be treated under the franchise agreement.