What constitutes insolvency for a Face Foundrie Area Developer that would trigger automatic termination?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
6.1.1 Area Developer becomes insolvent or makes a general assignment for the benefit of creditors;
6.1.2 a petition in bankruptcy is filed by Area Developer or such a petition is filed against and not opposed by Area Developer;
6.1.3 Area Developer is adjudicated a bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver of Area Developer or other custodian for Area Developer's business or assets is filed and consented to by Area Developer; if a receiver or other custodian (permanent or temporary) of Area Developer's assets or property, or any part thereof, is appointed by any court of competent jurisdiction;
Source: Item 23 — RECEIPTS (FDD pages 74–257)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, several conditions related to insolvency can trigger the automatic termination of the Area Developer Agreement. These conditions provide Face Foundrie with immediate recourse if the Area Developer faces severe financial distress.
Specifically, automatic termination occurs if the Area Developer becomes insolvent or makes a general assignment for the benefit of creditors. Additionally, the agreement is automatically terminated if a bankruptcy petition is filed by the Area Developer, or if a petition is filed against the Area Developer and not opposed. Furthermore, if the Area Developer is officially adjudicated as bankrupt or insolvent, the agreement is immediately terminated.
These stipulations are designed to protect Face Foundrie's interests by ensuring that Area Developers maintain financial stability. The automatic termination clause allows Face Foundrie to promptly sever ties with financially unstable developers, mitigating potential damage to the brand and network. Prospective Area Developers should carefully consider these terms and ensure they have sufficient financial resources and management expertise to avoid such defaults.