In the event of franchisee bankruptcy, does Hck Hot Chicken automatically terminate the agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.4 Termination with Notice and Opportunity to Cure.
Except for any default by Franchisee under Sections 14.2 or 14.3 of this Agreement, and as otherwise expressly provided elsewhere in this Agreement, Franchisee shall have 30 days (10 days in the case of any default in the timely payment of sums due to Franchisor or its Affiliates) after Franchisor's written notice of default within which to remedy any default under this Agreement, and to provide evidence of such remedy to Franchisor.
If any such default is not cured within that time period, or such longer time period as Applicable Law may require or as Franchisor may specify in the notice of default, this Agreement and all rights granted by it shall thereupon automatically terminate without further notice or opportunity to cure.
- 14.5 Reimbursement of Franchisor Costs.
In the event of a default by Franchisee, all of Franchisor's costs and expenses arising from such default, including reasonable legal fees and reasonable hourly charges of Franchisor's administrative employees shall be paid to Franchisor by Franchisee within five days after cure or upon demand by Franchisor if such default is not cured.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
Based on the 2025 Hck Hot Chicken Franchise Disclosure Document, the document does not explicitly state that franchisee bankruptcy will result in automatic termination of the franchise agreement. However, Section 14.3 outlines conditions under which Hck Hot Chicken can terminate the agreement without offering an opportunity to cure, but these conditions do not specifically mention bankruptcy.
Section 14.4 describes that franchisees typically have 30 days to remedy any default after written notice from Hck Hot Chicken, except for defaults under Sections 14.2 or 14.3, or as otherwise provided in the agreement. For defaults related to timely payments, the cure period is reduced to 10 days. If a default is not corrected within the specified time, the agreement may automatically terminate.
Section 14.5 states that if a franchisee defaults, they are responsible for covering all of Hck Hot Chicken's costs and expenses resulting from the default, including legal fees and administrative charges. These costs must be paid within five days of the cure or upon demand if the default is not cured. Prospective franchisees should clarify with Hck Hot Chicken the specific conditions under which bankruptcy would trigger termination of the franchise agreement and what financial obligations might arise in such a situation.