In California, will the Franchise Agreement provision for termination upon bankruptcy be fully enforceable for a Byrider franchise?

According to Byrider's 2025 Franchise Disclosure Document, the Franchise Agreement does contain a provision that allows Byrider to terminate the agreement if a franchisee declares bankruptcy. However, this provision's enforceability in California is uncertain. While Byrider states its intent to enforce the provision to the extent permissible, it acknowledges that federal bankruptcy law (11 U.S.C.A. Sec. 101 et. seq.) may limit its ability to do so. This means that a California franchisee's bankruptcy might not automatically lead to termination of the agreement.

California law further complicates the matter. The FDD states that California Business and Professions Code Sections 20000 through 20043 grants rights to franchisees regarding termination, transfer, or nonrenewal. If any part of the Franchise Agreement, including the bankruptcy termination clause, conflicts with this law, the California law will take precedence. This creates a layer of protection for Byrider franchisees in California, potentially preventing Byrider from fully enforcing the termination-upon-bankruptcy clause.

Prospective Byrider franchisees in California should be aware that the enforceability of the bankruptcy termination clause is not guaranteed and depends on the specifics of both federal and California law at the time of any bankruptcy filing. It would be prudent for potential franchisees to seek legal counsel to fully understand their rights and obligations under these circumstances. They should also discuss with Byrider under what specific conditions they would seek to enforce this clause.