If a Deka Lash franchisee's business is judicially determined to be insolvent, can Deka Lash terminate the agreement?

According to the 2024 Deka Lash Franchise Disclosure Document, Deka Lash has the right to terminate the Development Agreement, without providing an opportunity to cure the default, if the Developer becomes insolvent. Insolvency is defined as being unable to pay bills in the ordinary course of business as they become due. This termination is effective immediately upon written notice to the Developer.

This clause is significant for prospective Deka Lash developers because it means that financial instability can lead to immediate termination of the agreement. Unlike some other termination clauses, there is no opportunity to rectify the situation. This could result in the loss of rights to develop further Deka Lash units in the designated area.

It is important to note that this clause refers to the termination of the Development Agreement, which pertains to developers with rights to open multiple units. The document does not explicitly state whether a similar clause exists in the standard Franchise Agreement for a single-unit franchisee. A prospective franchisee should clarify with Deka Lash whether a similar insolvency clause exists in the standard Franchise Agreement, and what specific financial conditions would trigger such a termination.