Under what circumstances related to bankruptcy might the termination provision in the Afuri Ramen Dumpling Franchise Agreement be unenforceable?

According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, the Franchise Agreement provides for termination upon bankruptcy; however, this provision may not be enforceable under federal bankruptcy law. Specifically, the FDD references 11 U.S.C.A. Sec. 101 et. seq., indicating that federal bankruptcy law could supersede the termination clause in the franchise agreement.

This means that if an Afuri Ramen Dumpling franchisee declares bankruptcy, the franchisor's right to terminate the agreement might be restricted by federal law. The franchisee may have the opportunity to reaffirm their obligations under the agreement, comply with conditions imposed by Afuri Ramen Dumpling, and meet other requirements outlined in the United States Bankruptcy Code to prevent termination.

Prospective franchisees should consult with legal counsel to fully understand their rights and obligations under federal bankruptcy law and how it interacts with the termination provisions of the Afuri Ramen Dumpling Franchise Agreement. This is particularly important for franchisees in California, as the FDD also notes that California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer, or non-renewal of a franchise, and if the Franchise Agreement contains a provision that is inconsistent with the law, the law will control.