What happens if a Floyds 99 Franchisee becomes insolvent?

According to Floyds 99's 2025 Franchise Disclosure Document, if a franchisee becomes insolvent, several actions can be taken. Floyds 99 has the right to terminate the Franchise Agreement immediately upon written notice if the franchisee becomes insolvent or is adjudicated bankrupt. This also applies if any action is taken by the franchisee or others against the franchisee under any insolvency, bankruptcy, or reorganization act. The FDD notes that this provision may not be enforceable under federal bankruptcy law. Additionally, termination can occur if the franchisee makes an assignment for the benefit of creditors or a receiver is appointed.

Beyond immediate termination, Floyds 99 also has management rights in the event of franchisee insolvency. To prevent disruption and protect the brand's value, Floyds 99 can appoint an interim Principal Manager to operate the shop. This manager will oversee operations for as long as Floyds 99 deems necessary. Floyds 99 will keep all monies generated by the shop in a separate account, deducting expenses and reasonable compensation for its representatives.

During the period of management by the interim Principal Manager, Floyds 99 has the right to charge a reasonable management fee in addition to the standard royalties, national marketing contributions, and other amounts payable under the Franchise Agreement. The franchisee agrees to hold harmless Floyds 99 and its representatives for all actions occurring during this temporary operation. This means the franchisee will not be able to sue Floyds 99 for any actions taken during the period of management by the interim Principal Manager.