If a levy or execution is made against a Fly To Fit business, what are the consequences?
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, if a levy or execution is made against the Fly To Fit business, it constitutes a breach of the franchise agreement. Specifically, the agreement can be terminated if a levy or execution is made against the business. However, if the franchisee is diligently contesting the levy or execution in good faith, an attachment or lien must remain on the business for 30 days before it is considered a breach, giving the franchisee some time to resolve the issue.
This provision protects Fly To Fit by allowing them to terminate the franchise agreement if the franchisee faces significant financial distress that could harm the brand or its reputation. It also ensures that Fly To Fit is not associated with a business that is subject to legal claims or financial instability. For a prospective franchisee, this means that maintaining sound financial health and promptly addressing any legal or financial issues is crucial to avoid potential termination of the franchise agreement.
It is important to note that the franchisee has a 30-day window to contest the levy or execution in good faith. This provides an opportunity to resolve the issue without automatically triggering termination. However, failure to address the levy or execution within this timeframe can lead to the termination of the franchise agreement, resulting in the loss of the franchise and potential financial penalties, such as liquidated damages as described in Section 14.5 of the franchise agreement.