What does the Bft Rider state about the enforceability of termination upon the Developer's bankruptcy?

According to Bft's 2025 Franchise Disclosure Document, specifically the Rider to the Multi-Unit Agreement for use in Maryland, a provision in the agreement that allows Bft to terminate the agreement upon the Developer's bankruptcy might not be enforceable under federal bankruptcy law. This is based on U.S.C. Sections 101 et seq., which govern bankruptcy proceedings. This rider is designed to address specific legal considerations within Maryland.

This means that if a Bft Developer in Maryland files for bankruptcy, Bft's ability to automatically terminate the Multi-Unit Agreement may be restricted. Federal bankruptcy law could override the termination clause in the agreement, potentially allowing the Developer to continue operating despite the bankruptcy.

For a prospective Bft franchisee, this information is crucial because it highlights the interplay between franchise agreements and federal bankruptcy law. It suggests that standard termination clauses may not always be enforceable, offering some protection to the franchisee in the event of financial distress. However, it is important to note that the specific outcome would depend on the details of the bankruptcy case and the interpretation of the law by the bankruptcy court. Franchisees should seek legal counsel to fully understand their rights and obligations in such situations.