Does Aw need to provide a notice of termination to the franchisee if they file 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 will expire automatically without notice if the franchisee files for bankruptcy. Specifically, if the franchisee or any of their owners presents a petition or application seeking relief under the Federal Bankruptcy Act or any similar state law, the agreement expires immediately upon filing. The FDD states that the term of the agreement is amended to expire the moment the petition is presented to a court official for stamping and filing.
Similarly, the agreement terminates automatically without notice if someone else files a petition seeking to have the franchisee or their owners declared bankrupt or insolvent, and that petition is not dismissed within 60 days after filing. In this case, the agreement expires on the 60th day after the initial filing.
The franchisee and their owners also waive any rights they may have under the Federal Bankruptcy Rules and consent to the termination or expiration of the agreement. They also agree not to seek any court order that would prevent this provision from taking effect. This means that Aw does not need to provide a notice of termination if a franchisee files for bankruptcy, as the agreement terminates automatically.