What is the timeframe for a Checkersrallys franchisee to discharge a bankruptcy petition filed against them to avoid immediate termination?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary set forth in the Franchise Disclosure Document, the following provisions shall supersede and apply to all Franchises offered and sold in the State of Maryland:
The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, the Franchise Agreement allows for termination upon a franchisee's bankruptcy. However, an addendum for franchises offered and sold in the State of Maryland clarifies that this provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
This suggests that while Checkersrallys's standard agreement includes bankruptcy as a cause for termination, federal law might override this provision, potentially preventing immediate termination. The specific timeframe a franchisee has to discharge a bankruptcy petition to avoid termination is not explicitly stated in this excerpt.
Prospective franchisees should consult with a legal expert to understand their rights and obligations under federal bankruptcy law and the specific terms of the Checkersrallys Franchise Agreement, particularly if they are considering operating in Maryland. It is important to determine under what conditions and within what timeframe a bankruptcy filing could lead to termination, despite the potential protections offered by federal law.