What constitutes an event of termination due to bankruptcy or insolvency for the Baymont Inn Suites agreement?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.3 Termination Due to Bankruptcy or Insolvency.
Either Party shall have the right to immediately terminate this Agreement in the event (a) a bankruptcy, reorganization, receivership, insolvency or other similar proceeding for the arrangement of such Party's obligations is instituted by such Party, or involuntarily against such Party and not dismissed within ninety (90) days; (b) the other Party is unable to pay its debts as they become due or admits in writing its inability to pay its debts generally; or (c) the other Party becomes subject to any statutory, administrative or court order or other official action which prevents either from continuing to fulfill its obligations under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 96–97)
What This Means (2025 FDD)
According to the 2025 Baymont Inn Suites Franchise Disclosure Document, Section 13.3 outlines the conditions under which the agreement can be terminated due to bankruptcy or insolvency. Baymont Inn Suites has the right to terminate the agreement immediately if the franchisee initiates bankruptcy, reorganization, receivership, insolvency, or similar proceedings to manage their obligations. This also applies if such proceedings are involuntarily initiated against the franchisee and not dismissed within 90 days.
Additionally, Baymont Inn Suites can terminate the agreement if the franchisee is unable to pay debts as they become due or admits in writing their inability to pay debts generally. The agreement can also be terminated if the franchisee becomes subject to any statutory, administrative, or court order or other official action that prevents either party from fulfilling their obligations under the agreement.
It is important to note that Item 22 of the FDD includes addenda for various states, such as California, Maryland, and Illinois, which may modify or supersede certain provisions of the franchise agreement to comply with state-specific franchise laws. For example, the addenda may address the enforceability of termination clauses related to bankruptcy proceedings or waivers of rights under state franchise laws. Franchisees should carefully review these addenda to understand how state laws may affect their rights and obligations under the franchise agreement.