Under what circumstances can Face Foundrie terminate the franchise agreement without a cure period?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
14.02 Termination by Franchisor without a Cure Period. Franchisor may immediately terminate this Agreement upon written notice to Franchisee, without opportunity to cure, if:
(a) Franchisee files a petition under any bankruptcy or reorganization law, becomes insolvent, or has a trustee or receiver appointed by a court of competent jurisdiction for all or any part of its property;
(b) Franchisee seeks to effect a plan of liquidation, reorganization, composition or arrangement of its affairs, whether or not the same shall be subsequently approved by a court of competent jurisdiction; it being understood that in no event shall this Agreement or any right or interest hereunder be deemed an asset in any insolvency, receivership, bankruptcy, composition, liquidation, arrangement or reorganization proceeding;
(c) Franchisee has an involuntary proceeding filed against it under any bankruptcy, reorganization, or similar law and such proceeding is not dismissed within sixty (60) days thereafter;
(d) Franchisee makes a general assignment for the benefit of its creditors;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, Face Foundrie can terminate the franchise agreement immediately, without providing an opportunity to cure, under specific circumstances. These circumstances include if the franchisee files for bankruptcy or reorganization, becomes insolvent, or has a trustee or receiver appointed for their property. This also applies if the franchisee seeks to implement a plan for liquidation, reorganization, or arrangement of their affairs. Additionally, Face Foundrie can terminate the agreement without a cure period if an involuntary proceeding is filed against the franchisee under bankruptcy, reorganization, or similar law and is not dismissed within 60 days. Finally, if the franchisee makes a general assignment for the benefit of its creditors, Face Foundrie can immediately terminate the agreement.
These termination rights are significant for a prospective Face Foundrie franchisee because they highlight situations that could lead to an immediate loss of the franchise. The franchisee needs to be aware of these potential pitfalls and ensure they maintain a financially stable business to avoid such terminations. The absence of a cure period in these instances means that any misstep in these areas could have immediate and severe consequences.
It is important to note that these conditions are not uncommon in franchise agreements, as franchisors typically want to protect their brand and system from the negative impacts of a franchisee's financial instability or misconduct. However, the specific triggers and conditions can vary between franchise systems. Therefore, a prospective Face Foundrie franchisee should carefully review these termination clauses and seek legal counsel to fully understand their rights and obligations under the franchise agreement.