What is the timeframe for satisfying a final judgment against a Hyper Kidz franchisee to avoid termination?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.1.8 If any of your principals shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by you or such a petition is filed against and not opposed by you; if you are adjudicated a bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver or other custodian for you or your business or assets is filed and consented to by you; if a receiver or other custodian (permanent or temporary) of your assets or property, or any part thereof, is appointed by any court of competent jurisdiction; if proceedings for a composition with creditors under any state or federal law should be instituted by or against you; if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless a supersedeas bond is filed); if execution is levied against your business or property; if suit to foreclose any lien or mortgage against the premises or equipment is instituted against you and not dismissed within thirty (30) days; or if the real or personal property of the business shall be sold after levy thereupon by any sheriff, marshal, or constable.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, a franchisee has 30 days to satisfy a final judgment to avoid potential termination of their agreement. Specifically, if a final judgment remains unsatisfied or of record for thirty (30) days or longer, Hyper Kidz has grounds for termination, unless a supersedeas bond is filed.
This means that if a court issues a final judgment against a Hyper Kidz franchisee, the franchisee must ensure the judgment is satisfied within 30 days. Failing to do so gives Hyper Kidz the right to terminate the franchise agreement. A supersedeas bond, which is a type of surety bond, can be filed to suspend the enforcement of a judgment during the appeal process, providing an alternative to immediate satisfaction of the judgment.
This clause protects Hyper Kidz from franchisees who may be facing severe financial difficulties, which could negatively impact the brand's reputation and the performance of other franchise locations. It is a fairly standard clause in franchise agreements, as franchisors need to ensure the financial stability of their franchisees to maintain the overall health of the franchise system. Franchisees should be aware of this requirement and take steps to address any judgments against them promptly to avoid jeopardizing their franchise agreement.