What federal law provides rights to Bumble Roofing franchisees concerning termination of the Franchise Agreement upon certain bankruptcy-related events?

According to Bumble Roofing's 2025 Franchise Disclosure Document, several state addenda address the enforceability of termination clauses related to franchisee bankruptcy. Specifically, the Maryland addendum states that Bumble Roofing's termination of the Franchise Agreement due to a franchisee's bankruptcy may not be enforceable under federal law, citing 11 U.S.C.A. 101 et seq. Similarly, the Virginia addendum notes that any provision in the franchise agreement allowing termination upon the franchisee's bankruptcy may not be enforceable under federal bankruptcy law, again referencing 11 U.S.C. 101 et seq. The California addendum also mentions that the franchise agreement provides for termination upon bankruptcy but that this provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. §101 et seq.).

These disclosures are important for prospective Bumble Roofing franchisees because they highlight potential limitations on the franchisor's ability to terminate the franchise agreement in the event of bankruptcy. Federal bankruptcy law, specifically 11 U.S.C.A. 101 et seq., provides certain protections to debtors, including franchisees, which may override the termination clauses in the franchise agreement. This means that even if the franchise agreement states that bankruptcy is grounds for termination, a court may not uphold that provision under federal law.

For a potential Bumble Roofing franchisee, this information suggests that the consequences of filing for bankruptcy might not automatically result in the loss of their franchise. However, it is crucial to understand that the specific circumstances of each bankruptcy case can vary, and the enforceability of termination clauses can depend on the court's interpretation of federal bankruptcy law. Therefore, it is advisable for prospective franchisees to seek legal counsel to fully understand their rights and obligations in the event of financial distress or bankruptcy.

It's also important to note that these disclosures are included in state-specific addenda, indicating that the enforceability of termination clauses can vary depending on the state in which the franchise operates. Franchisees should carefully review the addendum for their specific state to understand any additional protections or limitations that may apply under state law.