What happens if an involuntary petition for bankruptcy is filed against a Southern Steer franchisee?
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 Southern Steer's 2025 Franchise Disclosure Document, if an involuntary petition for bankruptcy is filed against a franchisee, the franchisee has 60 days to have the petition dismissed. If the franchisee is unable to dismiss the bankruptcy petition within that 60-day period, it can result in immediate termination of the Franchise Agreement. This clause is in place to protect Southern Steer from potential financial and operational instability of a franchisee.
This means that a franchisee facing such a petition must act quickly to resolve the situation. Failure to do so could lead to the loss of their franchise. The franchisee also risks losing their Southern Steer business if they are deemed insolvent under applicable state or federal law, or if they file for bankruptcy themselves.
Southern Steer also has the right to appoint an interim manager to operate the franchisee's Southern Steer Business if the franchisee is unable to operate the business for 45 days or longer for any reason. In this case, all revenue will be kept in a separate account, and the expenses of the business, including compensation for Southern Steer and its agents, will be charged to the account. Southern Steer will also retain 50% of gross revenues as a management fee.