Under what circumstances related to bankruptcy or insolvency will an Ella Cafe franchise agreement automatically terminate without notice?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
ARTICLE 14. DEFAULT AND TERMINATION
- **14.1.
Termination In the Event of Bankruptcy or Insolvency**.
Franchisee will be deemed to be in default of this Agreement, and all rights granted to it in this Agreement will automatically terminate without notice if: (a) Franchisee becomes insolvent or makes a general assignment for the benefit of creditors; (b) a petition in bankruptcy is filed by Franchisee or such a petition is filed against Franchisee and Franchisee does not oppose it; (c) Franchisee is adjudicated as bankrupt or insolvent; (d) a bill in equity or other proceeding for the appointment of a receiver for Franchisee or other custodian for its business or assets is filed and consented to by Franchisee; (e) a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; (f) proceedings for a composition with creditors under any state or federal law is instituted by or against Franchisee; (g) a final judgment remains unsatisfied or of record for 30 days or longer (unless a supersedeas bond is filed); (h) Franchisee is dissolved; (i) execution is levied against Franchisee's business or property; (j) judicial, non-judicial, or administrative proceedings to foreclose any lien or mortgage against Franchisee, the Business Entity, or the Coffee House premises or assets or equipment are instituted against Franchisor and are not dismissed within 30 days; or (k) the real or personal property of Franchisee or the Coffee House is sold after levy thereupon by any sheriff, marshal, or constable.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the franchise agreement will automatically terminate without notice if the franchisee is deemed to be in default due to bankruptcy or insolvency. This includes several specific scenarios that would trigger immediate termination.
These scenarios include the franchisee becoming insolvent or making a general assignment for the benefit of creditors. Additionally, the agreement terminates automatically if a bankruptcy petition is filed by the franchisee, or if a petition is filed against them and they do not oppose it. Adjudication as bankrupt or insolvent also leads to automatic termination. The filing of an equity bill or other proceeding for the appointment of a receiver, consented to by the franchisee, will also cause immediate termination, as will the appointment of a receiver or custodian of the franchisee's assets by a court.
Further conditions that trigger automatic termination involve proceedings for composition with creditors, unsatisfied final judgments, dissolution of the franchisee, execution levied against the franchisee's business or property, and un-dismissed foreclosure proceedings against the franchisee. Finally, the sale of the franchisee's property after levy by a sheriff, marshal, or constable also results in automatic termination of the Ella Cafe franchise agreement.