Regarding a Byrider franchise in Maryland, how does federal bankruptcy law potentially affect the enforceability of the franchise agreement's termination provision upon bankruptcy?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
r arbitration to take place outside of Illinois.
Your rights upon termination and non-renewal of the franchise are set forth in Sections 19 and 20 of the Illinois Franchise Disclosure Act.
In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
MARYLAND
- The following is added to the end of the "Summary" sections of Item 17€, entitled Requirements for franchisee to renew or extend, and Item 17(n), entitled Conditions for franchisor approval of transfer:
However, any release required as a condition of renewal, sale and/or assignment/transfer will not apply to claims or liability arising under the Mary
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the franchise agreement allows Byrider to terminate the agreement if a franchisee declares bankruptcy. However, this termination provision may not be fully enforceable under federal bankruptcy law (11 U.S.C. Sections 101 et seq.).
Specifically for Maryland franchisees, the FDD states that any release required as a condition of renewal, sale, or transfer will not apply to claims or liability arising under the Maryland Franchise Registration and Disclosure Law. Additionally, Section 16.2(A)(4) of the Franchise Agreement, which likely contains the termination upon bankruptcy clause, may not be enforceable under federal bankruptcy law.
Byrider states that it will enforce the termination provision to the extent enforceable. This means that while Byrider intends to exercise its right to terminate the franchise agreement upon a franchisee's bankruptcy, the federal bankruptcy court may not allow it, depending on the specific circumstances of the bankruptcy case and the provisions of federal law. A prospective franchisee should seek legal counsel to fully understand their rights and obligations in the event of bankruptcy.