Under what conditions can Nothing Bundt Cakes require a franchisee to immediately close their Bakery?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
If you violate the in-term restrictive covenant set forth in Section 16.1 below, or if you knowingly distribute Products within another franchisee's territory in violation of Section 1.2 above.
- (j) Liens.
If a levy of writ of attachment or execution, or any other lien, is placed against you, any partnership, limited liability company, or corporation you create to operate the Bakery, or any of your principals or any of their assets which are not released or bonded against within thirty (30) days.
- (k) Insolvency.
If you or any of your principals guaranteeing your obligations under this Agreement become insolvent.
- (l) Abandonment.
If you voluntarily or otherwise abandon the Bakery.
The term "abandon" includes any conduct which indicates a desire or intent to discontinue operating the Bakery in accordance with the terms of this Agreement and will apply in any event if you fail to operate the Bakery as a Nothing Bundt Cakes® Bakery for a period of two (2) or more consecutive days without our prior written approval.
- (m) Proprietary Software.
If you misuse or make unauthorized use of any proprietary software we develop for use in connection with the System.
- (n) Insurance.
If you fail to maintain insurance or repay us for insurance we pay for, or if you otherwise fail to adhere to the requirements of Section 13.
- (o) Government Regulations.
If you fail, within fifteen (15) calendar days after notification of non-compliance by federal, state or local government authorities to comply with any law or regulation applicable to the Bakery.
- (p) Government Actions.
If any government action is taken against you that results in any obligation upon us which in our sole judgment is uneconomical, not in the best interests of us, or would result in us having an unintended relationship or obligation.
- (q) Anti-Terrorist Activities.
If you fail to comply with the provisions of Section 20.6 below.
- (r) Personal Use of Bakery Property.
If you take employee taxes, FICA, insurance revenue or benefits, or any other assets of the Bakery for personal use.
- (s) Insufficient Funds.
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
According to the 2025 Nothing Bundt Cakes FDD, there are several conditions that could lead to the immediate termination of the franchise agreement and require the franchisee to close their bakery. These include violating in-term restrictive covenants, such as distributing products in another franchisee's territory, or if a lien is placed against the franchisee or their business and is not resolved within 30 days.
Other conditions that could lead to immediate closure involve insolvency of the franchisee or any principals guaranteeing their obligations, abandonment of the bakery (defined as failing to operate as a Nothing Bundt Cakes bakery for two or more consecutive days without prior written approval), misuse of proprietary software, or failure to maintain required insurance.
Additionally, failure to comply with government regulations within 15 calendar days of notification, government actions that create uneconomical or unintended obligations for Nothing Bundt Cakes, non-compliance with anti-terrorism provisions, taking bakery assets for personal use, or having insufficient funds can also result in immediate termination and closure. Relocating the bakery without prior written consent from Nothing Bundt Cakes also gives them the right to immediately terminate the agreement.