Does the Aw franchise agreement specify who is considered a 'court official' for the purposes of automatic termination upon filing for bankruptcy?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement will expire automatically without notice upon the presentation for filing by you (or any of your Owners) of a petition or application seeking any type of relief under the Federal Bankruptcy Act or any state insolvency or similar law. (Upon presentation for filing of such a petition or application, the term of this Agreement will be deemed to be amended so that the expiration of this Agreement occurs at the moment said petition or application is presented to a court official for stamping and filing.) 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, the franchise agreement specifies that upon filing for bankruptcy, the agreement will expire automatically. The expiration occurs the moment the petition or application is presented to a court official for stamping and filing. The agreement does not elaborate further to define who is considered a 'court official'.
This means that the Aw franchise agreement terminates immediately when bankruptcy paperwork is submitted to the court. The stamping and filing by a court official triggers the termination. This clause is designed to protect Aw in the event of a franchisee's financial instability.
Prospective Aw franchisees should be aware of this automatic termination clause and understand the implications of filing for bankruptcy. It would be prudent to seek legal counsel to fully understand the ramifications of this clause and to discuss potential strategies for managing financial difficulties to avoid bankruptcy. Franchisees may want to ask Aw for clarification on who qualifies as a 'court official' in different jurisdictions to fully understand the trigger for termination.