What insolvency-related actions by a Jersey Mikes franchisee can lead to automatic termination of the franchise agreement?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
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Acknowledges that Franchisee is unable to pay its debts as they come due or commits any other affirmative act of insolvency, or files any petition or action of insolvency, or for appointment of a receiver or trustee, files a petition in bankruptcy or makes any assignment for the benefit of creditors, or fails to vacate or dismiss within sixty (60) days after filing any such proceedings commenced against Franchisee by a third party;
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mikes's 2025 Franchise Disclosure Document, several insolvency-related actions by a franchisee can lead to the automatic termination of the franchise agreement. These actions include acknowledging an inability to pay debts as they become due or committing any other affirmative act of insolvency.
Furthermore, the franchise agreement can be terminated if the franchisee files any petition or action of insolvency, or for the appointment of a receiver or trustee. Filing a petition in bankruptcy or making any assignment for the benefit of creditors also constitutes grounds for automatic termination.
Finally, if a third party commences such proceedings against the Jersey Mikes franchisee, failure to vacate or dismiss these proceedings within sixty (60) days after filing will also result in automatic termination of the franchise agreement. These stipulations are typical in franchise agreements to protect the franchisor's brand and financial interests by ensuring franchisees remain solvent and capable of meeting their financial obligations.