What is the deadline for dismissing a bankruptcy petition filed against an Aw franchisee to avoid automatic termination?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement will also terminate automatically without notice if someone files a petition or application seeking to have you (or any of your Owners) adjudicated a bankrupt or insolvent, or seeking other relief against you (or any of your Owners) under the Bankruptcy Act or any state insolvency or similar law and the petition or application is not dismissed within sixty (60) days after it is filed. In that event, the term of this Agreement will be deemed to be amended so that it expires on the 60th day after filing. You (and your Owners) expressly and knowingly waive any rights you may have under the provisions of the Federal Bankruptcy Rules, and consent to the termination or expiration of this Agreement, or any other relief which we may seek in a complaint to lift the provisions of any automatic stay under any bankruptcy rules. In addition, you (and your Owners) agree not to seek any injunctive relief from any court in any jurisdiction which would have the effect of staying or enjoining this provision.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if a petition or application is filed seeking to have an Aw franchisee (or any of their owners) adjudicated bankrupt or insolvent, or seeking other relief under the Bankruptcy Act or any state insolvency law, the franchisee has 60 days to dismiss the petition or application to avoid automatic termination of the franchise agreement. If the petition is not dismissed within this timeframe, the franchise agreement will automatically terminate on the 60th day after the filing date.
Aw emphasizes the franchisee's (and their owners') express and knowing waiver of any rights they may have under the Federal Bankruptcy Rules. They also consent to the termination or expiration of the Agreement, or any other relief which Aw may seek in a complaint to lift the provisions of any automatic stay under any bankruptcy rules.
Furthermore, Aw franchisees (and their Owners) agree not to seek any injunctive relief from any court in any jurisdiction which would have the effect of staying or enjoining this provision. This clause underscores the importance of understanding the implications of bankruptcy filings on the franchise agreement and the limited recourse available to franchisees in such situations.