Does the Southern Steer franchisee have an opportunity to cure a default if they are deemed insolvent?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) the Franchisee or Guarantor(s) are deemed insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Franchisee and the Franchisee is unable within a period of 60 days from such filing to obtain the dismissal of the bankruptcy petition, or the Franchisee files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law;
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, a franchisee generally does not have an opportunity to cure a default if they are deemed insolvent. The FDD states that if the franchisee or guarantor is deemed insolvent under applicable state or federal law, it constitutes an immediate default that can lead to termination of the franchise agreement.
Specifically, if an involuntary petition for bankruptcy is filed against the Southern Steer franchisee, and the franchisee cannot obtain a dismissal of the bankruptcy petition within 60 days, this also constitutes an immediate default. Similarly, if the franchisee files for bankruptcy or is adjudicated bankrupt under applicable state or federal law, it results in immediate default.
This means that Southern Steer franchisees facing financial difficulties and potential insolvency may face immediate termination of their franchise agreement without an opportunity to rectify the situation. This lack of a cure period in cases of insolvency is a significant risk for franchisees, as it can lead to the loss of their business and franchise rights without any recourse.