What constitutes a 'material judgment' against a Floyds 99 Franchisee that could trigger termination?

According to the 2025 Floyds 99 Franchise Disclosure Document, a franchisee may face termination of their franchise agreement if a material judgment is obtained against them and remains unsatisfied or of record for 30 days or longer, unless a supersedeas or other appeal bond has been filed. Additionally, termination can occur if execution is levied against the franchisee's business or any property used in the operation of the Floyds 99 shop and is not discharged within five days.

This means that if a court issues a significant judgment against a Floyds 99 franchisee, the franchisee has a limited time to either satisfy the judgment, appeal it with a bond, or discharge any levies against their business or property. Failure to do so within the specified timeframes (30 days for an unsatisfied judgment, five days for an undischarged levy) can result in the termination of the franchise agreement by Floyds 99. The FDD does not define 'material judgment,' leaving some ambiguity as to what constitutes a significant enough judgment to trigger termination.

This clause protects Floyds 99 from franchisees who may be facing severe financial difficulties, which could negatively impact the brand's reputation and the overall franchise system. Franchisees should be aware of this clause and take steps to manage their financial and legal affairs to avoid such judgments or levies. It is common practice in franchising to include clauses that allow for termination in cases of financial instability or legal issues that could harm the franchise system.

Prospective franchisees should seek clarification from Floyds 99 regarding the definition of 'material judgment' to fully understand the potential implications. They should also consult with legal and financial advisors to assess their ability to meet these requirements and manage potential risks associated with operating a Floyds 99 franchise.