What specific actions related to insolvency can trigger termination of the Red Wagon Club agreement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
parties, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim for indemnity under this Section. Licensee agrees that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover under this Section. An Indemnified Party may use control the defense and settlement of any claims against it in its sole discretion, including choice of its own legal counsel.
10. Termination.
(a) Termination Upon Default. The non-defaulting Party shall have the right to terminate this Agreement (without any prior notice or prior authorization from the judicial court or arbitral tribunal) and pursue any other remedies available at law or in equity, except as limited herein, if the other Party: (i) defaults in the performance of any of its obligations under this Agreement and such default continues for more than 30 days after receipt of written notice from the non-defaulting Party; (ii) becomes insolvent or unable to pay its debts generally as they become due, files any voluntary petition in bankruptcy or for corporate reorganization or similar relief, is dissolved or liquidated or takes action for such, any petition shall be filed against such Party under
any bankruptcy or insolvency law, and such petition shall not have been dismissed within 30 days, or any order appointing a receiver, trustee, or liquidator of the business of such Party is not vacated within 30 days; or (iii) violates any applicable law relating to transactions with foreign parties or international terrorist activities, or such Party's assets, property, or interests are blocked under any such applicable law. The Parties acknowledge and agree that a copy of notice required to be given by a Party hereunder shall be delivered to Franchisor concurrently with such Party's delivery of the notice to the other Party.
- (b) Other Termination. This Agreement shall terminate effective on written notice to Licensee, if:
- (i) Licensee fails to continuously maintain the insurance coverages required under this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 47–142)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, several actions related to insolvency can trigger the termination of the agreement. If the licensee becomes insolvent or is unable to pay debts as they become due, this can lead to termination. Filing a voluntary petition in bankruptcy, corporate reorganization, or seeking similar relief also constitutes grounds for termination. Furthermore, if the licensee is dissolved, liquidated, or takes action towards such outcomes, the agreement can be terminated.
If a petition is filed against the licensee under any bankruptcy or insolvency law and is not dismissed within 30 days, it can result in termination. Similarly, if an order appointing a receiver, trustee, or liquidator for the licensee's business is not vacated within 30 days, the agreement may be terminated. Additionally, if the licensee makes an assignment for the benefit of creditors or admits in writing their insolvency or inability to pay debts, this can trigger termination.
Moreover, if the licensee consents to the appointment of a receiver, trustee, or liquidator for a substantial part of their property, or if the licensee's law firm business is attached, seized, or levied on, and such actions are not vacated within 30 days, the agreement can be terminated. These terms highlight the importance of maintaining financial stability and addressing any financial difficulties promptly to avoid potential termination of the Red Wagon Club license agreement.