What is the definition of 'Bankruptcy Code' as it applies to the Atwell Suites agreement?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
In accordance with the provision under Federal Bankruptcy Law (11 U.S.C.A. Sec. 101 et seq.), paragraphs 11.C(1)(b) and (d) of the License shall be amended to include the following language: "Enforceability of this provision is a matter governed by Federal Bankruptcy Law and enforceability or nonenforceability is subject to that law and rulings of a court of competent jurisdiction."
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 Atwell Suites FDD, the definition of the Bankruptcy Code is specified within the amendments to the license agreement for franchisees in certain states. These amendments clarify how federal bankruptcy law affects specific clauses within the Atwell Suites license agreement, particularly paragraphs 11.C(1)(b) and (d). The amendments explicitly reference "Federal Bankruptcy Law (11 U.S.C.A. Sec. 101 et seq.)", indicating that this section of the United States Code is what defines the Bankruptcy Code for the purposes of the agreement.
For a prospective Atwell Suites franchisee, this means that the enforceability of certain provisions in their license agreement, especially those related to termination or default, is subject to federal bankruptcy law. The amendments add language stating that the enforceability or non-enforceability of these provisions is governed by federal bankruptcy law and the rulings of a competent court. This is particularly relevant if the franchisee faces financial difficulties and considers filing for bankruptcy.
The inclusion of these amendments serves to protect both the franchisor and the franchisee by ensuring compliance with federal law. It acknowledges that bankruptcy law can override certain contractual obligations, providing a legal framework for addressing such situations. This also means that Atwell Suites franchisees need to be aware of how bankruptcy laws could impact their rights and obligations under the franchise agreement.
It is important for potential Atwell Suites franchisees to consult with legal counsel to fully understand the implications of these bankruptcy provisions. Understanding how federal bankruptcy law interacts with the franchise agreement can help franchisees make informed decisions and protect their interests in the event of financial distress. The FDD highlights the importance of these considerations, particularly for franchisees operating in states with specific franchise laws.