Under what circumstances will the Mr. Sandless agreement automatically terminate without notice or opportunity to cure?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement will automatically terminate, without notice and without an opportunity to cure, if you, or any of your partners, if you are a partnership, or any of your officers, directors, shareholders, or members, if you are a corporation or limited liability company, 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 you are dissolved; 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 Franchised Business shall be sold after levy thereupon by any sheriff, marshal, or constable.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless Franchise Disclosure Document, the franchise agreement will automatically terminate without any prior notice or chance to rectify the situation under specific conditions related to financial instability or legal actions against the franchisee. This automatic termination applies not only to the franchisee but also extends to their partners (if the franchisee is a partnership) or officers, directors, shareholders, or members (if the franchisee is a corporation or limited liability company).
These conditions include scenarios such as becoming insolvent, making a general assignment for the benefit of creditors, or filing for bankruptcy. If a bankruptcy petition is filed against the franchisee and is not opposed, this also triggers automatic termination. Adjudication as bankrupt or insolvent, the filing of a bill in equity for the appointment of a receiver, or the institution of proceedings for composition with creditors also lead to automatic termination.
Further, the Mr. Sandless franchise agreement will automatically terminate if a final judgment remains unsatisfied for thirty days or longer (unless a supersedeas bond is filed), if the franchisee is dissolved, or if execution is levied against the business or property. The institution of a suit to foreclose any lien or mortgage against the premises or equipment, if not dismissed within thirty days, also results in automatic termination. Finally, the sale of the franchised business's real or personal property after levy by a sheriff, marshal, or constable will cause the agreement to automatically terminate.
These stipulations are significant for a prospective Mr. Sandless franchisee as they highlight the critical importance of maintaining financial stability and addressing legal issues promptly to avoid immediate termination of the franchise agreement. The franchisee should be aware that these conditions bypass any typical notice and cure periods, leading to an immediate loss of the franchise rights under these circumstances.