Is the termination provision upon bankruptcy in the Franchise Agreement and Supplemental Agreements for Bigfoot Forestry franchises always enforceable under federal bankruptcy law?

According to Bigfoot Forestry's 2025 Franchise Disclosure Document, the Franchise Agreement and Supplemental Agreements may include provisions that allow for termination of the franchise upon the franchisee's bankruptcy. However, the FDD explicitly states that such provisions may not be enforceable under federal bankruptcy law. This is because federal bankruptcy law (specifically, 11 U.S.C.A. Sec. 101 et seq.) governs how debtors' assets and contracts are treated during bankruptcy proceedings.

For a prospective Bigfoot Forestry franchisee, this means that while the franchise agreement might state that bankruptcy is grounds for termination, a court overseeing a bankruptcy case could potentially prevent Bigfoot Forestry from enforcing that clause. The enforceability depends on the specifics of the bankruptcy case and how the court interprets federal law in relation to the franchise agreement. This creates a degree of uncertainty for both the franchisee and franchisor.

This type of clause is relatively standard in franchise agreements, but its actual enforcement is subject to legal interpretation and the specific circumstances of a bankruptcy filing. Franchisees should be aware that bankruptcy might not automatically lead to termination, and franchisors need to understand that their contractual rights could be limited by bankruptcy law. It is advisable to seek legal counsel to fully understand the implications of bankruptcy clauses in franchise agreements.