What section of the Healthsource Chiropractic Franchise Agreement discusses bankruptcy and insolvency as grounds for termination?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| be asked to sign a contract with | ||
| materially | ||
| different | ||
| terms | ||
| and | ||
| conditions | ||
| than | ||
| your | ||
| original | ||
| Franchise Agreement. Your right to | ||
| renew will be contingent upon your | ||
| acceptance of these new terms and | ||
| conditions. | ||
| d. Termination by you | None. | You may be able to terminate under |
| grounds permitted by applicable law. | ||
| The Franchise Agreement does not | ||
| give you a contract right to terminate | ||
| prior to the end of the stated term. | ||
| e. Termination by us without cause | Not applicable | Not applicable. |
| f. Termination by us with cause | Section 15 | Only upon written notice, except that |
| if you fail to timely and expressly | ||
| assume, | ||
| ratify | ||
| or | ||
| confirm | ||
| the | ||
| Franchise | ||
| Agreement | ||
| in | ||
| any | ||
| bankruptcy | ||
| proceeding | ||
| and | ||
| you | ||
| cease, or have ceased, performance | ||
| under the Franchise Agreement in any | ||
| respect, then all rights granted to you | ||
| under the Franchise Agreement shall | ||
| immediately | ||
| and | ||
| automatically | ||
| terminate and revert to us without | ||
| further notice to you or action on our | ||
| part. | ||
| g. "Cause" defined –curable defaults | Section 15 | You do not pay us within 10 days after written notice; you do not comply with any other provision of the Franchise Agreement or specification, standard, or operating procedure and do not correct such failure within 30 days after written notice. |
| h. "Cause" defined – non-curable defaults | Section 15 | You fail to timely develop or open the franchise; you (or any individuals required to attend) fail to attend and/or successfully complete any required initial training or subsequent mandatory training; you abandon, surrender, transfer control of or do not actively operate the franchise or lose the right to occupy the franchise |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 53–64)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, Section 15 of the Franchise Agreement addresses termination by the franchisor with cause, specifically related to bankruptcy proceedings. This section stipulates that if a franchisee fails to expressly assume, ratify, or confirm the Franchise Agreement in any bankruptcy proceeding, and ceases performance under the agreement, all rights granted to the franchisee will immediately and automatically terminate without further notice from Healthsource Chiropractic.
This clause is significant for prospective Healthsource Chiropractic franchisees as it highlights the importance of maintaining financial stability and adhering to the Franchise Agreement, even in the event of financial distress. Failure to do so can result in the immediate termination of the franchise rights. The automatic termination aspect means the franchisee loses their rights without needing further action from Healthsource Chiropractic, which is a stringent condition.
Many franchise agreements contain clauses addressing termination due to bankruptcy or insolvency, as it directly impacts the franchisee's ability to uphold their contractual obligations. However, the specific terms can vary. Some franchisors might allow a period for the franchisee to reorganize or assume the agreement, while Healthsource Chiropractic's agreement appears to have a more immediate trigger for termination.
Prospective franchisees should carefully consider this clause and seek legal counsel to fully understand the implications of bankruptcy on their franchise agreement with Healthsource Chiropractic. Understanding the conditions under which the franchise can be terminated is crucial for managing risk and ensuring the long-term viability of their investment.