What is the timeframe for discharging a bankruptcy petition filed against a Checkers franchisee to avoid immediate termination?

The 2025 Checkers Franchise Disclosure Document includes an addendum for the state of Maryland that addresses the topic of bankruptcy. According to this addendum, the standard Franchise Agreement allows Checkers to terminate the agreement upon a franchisee declaring bankruptcy. However, the addendum notes that this particular provision in the agreement might not be enforceable under federal bankruptcy law, specifically citing 11 U.S.C.A. Sec. 101 et seq., which governs bankruptcy proceedings in the United States.

This means that while Checkers' standard agreement includes a clause allowing for termination due to bankruptcy, federal law may override this clause, potentially protecting franchisees who file for bankruptcy. The specific protections and timelines afforded to franchisees under federal bankruptcy law are not detailed in this addendum, but the document acknowledges the potential conflict between the franchise agreement and federal law.

Prospective franchisees in Maryland (and potentially other states, as federal law would apply nationwide) should be aware that the enforceability of the termination clause in the event of bankruptcy is uncertain and subject to interpretation under federal law. It would be prudent for potential franchisees to seek legal counsel to fully understand their rights and obligations in the event of financial distress and bankruptcy, and how federal law interacts with the franchise agreement.