What are the consequences if a receiver is appointed for a Fly To Fit franchisee's business?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- (iii) a receiver or trustee for the Business or all or substantially all of Franchisee's property is appointed by any court, or Franchisee makes a general assignment for the benefit of Franchisee's creditors, or Franchisee is unable to pay its debts as they become due, or a levy or execution is made against the Business, or an attachment or lien remains on the Business for 30 days unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or consented to by Franchisee and the petition is not dismissed within 45 days, or Franchisee is adjudicated as bankrupt;
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the appointment of a receiver or trustee for the franchisee's business or property by any court constitutes a cause for termination of the Franchise Agreement. Specifically, if a receiver or trustee is appointed for the business or substantially all of the franchisee's property, Fly To Fit has grounds to terminate the agreement. This also applies if the franchisee makes a general assignment for the benefit of creditors, is unable to pay debts as they become due, or faces a levy or execution against the business that remains for 30 days (unless contested in good faith).
Furthermore, the filing of a bankruptcy petition by the franchisee, or against the franchisee with their consent, which is not dismissed within 45 days, or an adjudication of bankruptcy also allows Fly To Fit to terminate the agreement. This means that any significant financial distress leading to these legal or financial actions can result in the loss of the franchise.
In practical terms, a Fly To Fit franchisee needs to maintain sound financial health to avoid such circumstances. Failure to do so not only jeopardizes their business but also risks the termination of their franchise agreement with Fly To Fit. This clause underscores the importance of financial stability and responsible business practices for all Fly To Fit franchisees.