Can the Floyds 99 Franchisor terminate the agreement if a receiver is appointed for the Franchisee?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
e provisions of Sections 18.4 and 20.3, the form of which is attached as Exhibit VI to this Agreement. Such consent will subject any interest they may have in this Agreement, in the Shop, or in the Franchisee covered by the option or right of first refusal provided for in said Sections, as applicable (whether a separate property interest, joint ownership property interest, community property interest, or otherwise), to the provisions of those Sections.
20. DEFAULT AND TERMINATION
- 20.1 Termination by Franchisor Effective Upon Notice. The Franchisor shall have the right, at its option, to terminate this Agreement and all rights granted the Franchisee hereunder, without affording the Franchisee any opportunity to cure any default (subject to any state laws to the contrary, where state law shall prevail), effective upon written notice to the Franchisee, addressed as provided in Section 24.12 upon the occurrence of any of the following events:
- a. Abandonment.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, the franchisor has the right to terminate the franchise agreement if a receiver is appointed for the franchisee. This falls under the conditions for termination by the franchisor effective upon notice, without affording the franchisee an opportunity to cure the default, although this is subject to state laws.
This provision means that if a court appoints a receiver to manage the franchisee's assets or business due to financial distress, Floyds 99 can immediately terminate the franchise agreement. This is a significant risk for franchisees, as it means that financial instability leading to a receivership can result in the loss of the franchise.
It is important to note that the enforceability of this provision may be affected by federal bankruptcy law. Prospective franchisees should seek legal counsel to understand their rights and obligations under both the franchise agreement and applicable state and federal laws regarding insolvency and bankruptcy.