What is the financial threshold for failing to pay suppliers that constitutes a non-curable default for a Ledgers franchisee?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
FDD: Item 17
FA: Section 8
- Item 17 of the Franchise Disclosure Document and Section 8 of the Franchise Agreement permit the Franchisor to terminate the Franchise Agreement without providing the Franchisee ninety (90) days prior notice of the proposed termination or sixty (60) days to cure the deficiency. These provisions are prohibited by the Wisconsin Fair Dealership Law, § 135.04. Accordingly, Item 17 of the Franchise Disclosure Document and Section 8 of the Franchise Agreement are hereby amended to require that prior to the termination of the Franchise Agreement Franchisor must provide Franchisee ninety (90) days written notice of a proposed termination, which states all the reasons for the termination, cancellation, non-renewal or substantive change in circumstances, and the Franchisee shall be given sixty (60) days from the date of delivery or posting of such notice to rectify any claimed deficiency. If the deficiency is rectified within the sixty (60) days the notice shall be void. The notice provisions shall not apply if the reason for termination, cancellation or non-renewal is insolvency, the occurrence of an assignment for the benefit of creditors or bankruptcy. If the reason for termination, cancellation
or non-renewal or substantial change in competitive circumstances is nonpayment of sums due under the Franchise Agreement, Franchisee shall still be entitled to (90) days written notice, as referenced above, however, Franchisee shall only have ten (10) days in which to remedy such default from the date of delivery or post of such notice.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–41)
What This Means (2025 FDD)
Based on the 2025 Ledgers Franchise Disclosure Document, the document does not specify a particular financial threshold for failing to pay suppliers that would constitute a non-curable default. The FDD does outline general conditions under which Ledgers can terminate the franchise agreement, but it does not provide specific details on supplier payment defaults.
Item 17 of the Franchise Agreement, as referenced in Item 22, discusses the conditions under which Ledgers can terminate the agreement. However, the excerpts provided do not detail the specific thresholds or conditions related to supplier payments that would trigger a non-curable default. The agreement does mention that in Wisconsin, a franchisee is entitled to ninety (90) days written notice of a proposed termination, which states all the reasons for the termination, cancellation, non-renewal or substantive change in circumstances, and the Franchisee shall be given sixty (60) days from the date of delivery or posting of such notice to rectify any claimed deficiency. If the reason for termination is nonpayment of sums due under the Franchise Agreement, the franchisee has only ten (10) days to remedy the default.
Prospective franchisees should carefully review the full Franchise Agreement and discuss with Ledgers representatives what specific financial conditions related to supplier payments could lead to a default and potential termination of the agreement. Understanding these thresholds is crucial for managing the business and maintaining a good relationship with the franchisor.