Fast-food operator closes locations after Chapter 11 bankruptcy
The overall chain has been struggling, and the franchisee's operating agreement has already been terminated.
When a company operates on a franchise model, it takes on a level of risk.
The model is a positive in that the business can expand without the company spending capital. But the risk is that your franchise operators can damage your name.
Every franchise operator has some level of vetting operations when it comes to picking the people who will license the brand. Generally, a potential operator must meet certain net-worth and operating-capital requirements.
