Is the provision in the Basecamp Fitness Franchise Agreement that terminates the franchise upon the franchisee's bankruptcy always enforceable in California?

According to Basecamp Fitness's 2025 Franchise Disclosure Document, the enforceability of the franchise agreement's termination provision upon the franchisee's bankruptcy is not absolute in California. The California Addendum to the Franchise Agreement indicates that such a provision "may not be enforceable" under Title 11 of the United States Code, Section 101, which pertains to bankruptcy laws. This suggests that federal bankruptcy laws could supersede the terms of the franchise agreement.

This means that if a Basecamp Fitness franchisee in California files for bankruptcy, the standard clause in the franchise agreement allowing for termination may not automatically apply. The franchisee's ability to continue operating the franchise during or after bankruptcy proceedings would then be subject to the protections and regulations outlined in federal bankruptcy law. This could prevent Basecamp Fitness from unilaterally terminating the agreement based solely on the bankruptcy filing.

Prospective Basecamp Fitness franchisees in California should be aware of this addendum and understand that the interplay between the franchise agreement and federal bankruptcy law can be complex. It is advisable to consult with legal counsel to fully understand their rights and obligations in the event of financial distress or bankruptcy. This is particularly important given that franchise agreements often contain clauses that are generally favorable to the franchisor, and addendums like this one highlight specific areas where franchisee rights are protected under state or federal law.