Under what circumstance regarding franchisee bankruptcy does the Baymont Inn Suites Franchise Agreement automatically terminate, and what federal law might affect this?

According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the Franchise Agreement will automatically terminate upon the bankruptcy of the franchisee. However, the FDD also states that this provision regarding automatic termination may not be enforceable under current Federal bankruptcy law, specifically citing 11 U.S.C. Section 101 et seq., which is the U.S. Bankruptcy Code.

This means that while the Baymont Inn Suites Franchise Agreement includes a clause for automatic termination upon a franchisee's bankruptcy, federal law might override this clause. A franchisee's bankruptcy case would be subject to the provisions of the U.S. Bankruptcy Code, which could prevent the automatic termination of the franchise agreement and allow the franchisee to continue operating the business under certain conditions.

Prospective franchisees should be aware that the enforceability of the automatic termination clause is uncertain due to potential conflicts with federal bankruptcy law. It is advisable to seek legal counsel to fully understand the implications of bankruptcy on the franchise agreement and to assess the risks and potential outcomes in such a scenario. Franchisees should discuss with Baymont Inn Suites what specific actions or requirements they may need to take to maintain the franchise agreement during bankruptcy proceedings.