If a petition is filed against a Checkersrallys franchisee in bankruptcy, reorganization, or similar proceeding, how long does the franchisee have to discharge it before the agreement is terminated?

According to the 2025 Checkersrallys Franchise Disclosure Document, the standard Franchise Agreement provides for termination upon bankruptcy. However, an addendum for the state of Maryland notes this provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).

This means that while Checkersrallys's standard agreement allows them to terminate the franchise agreement if a franchisee files for bankruptcy, this clause's enforceability is questionable, particularly in light of federal bankruptcy laws. A franchisee's rights and the franchisor's options during bankruptcy proceedings are subject to legal interpretation and could be influenced by federal regulations.

Prospective franchisees should seek legal counsel to fully understand their rights and obligations in case of bankruptcy. It is important to note that laws can vary by jurisdiction, and the enforceability of specific clauses in the franchise agreement may be subject to judicial review. Therefore, franchisees should consult with a legal professional to assess the potential implications of bankruptcy on their franchise agreement.