Under what circumstances might the bankruptcy termination provision in the Checkersrallys agreement be unenforceable?

According to the 2025 Checkersrallys Franchise Disclosure Document, the franchise agreement provides for termination upon bankruptcy. However, this provision may not be enforceable under federal bankruptcy law, specifically 11 U.S.C.A. Sec. 101 et seq. This means that despite the terms of the Checkersrallys franchise agreement, federal law might override the franchisor's right to terminate the agreement solely due to the franchisee's bankruptcy.

This addendum applies specifically to franchises offered and sold in the State of Maryland. It clarifies that certain provisions in the Franchise Disclosure Document are superseded by the information provided in the addendum. This ensures that Checkersrallys franchisees in Maryland are aware of the specific legal protections afforded to them under state law, particularly concerning franchise termination, releases, and legal claims.

For a prospective Checkersrallys franchisee, this information is crucial because it highlights a potential conflict between the franchise agreement and federal law. While the agreement might state that bankruptcy leads to automatic termination, federal bankruptcy law could prevent Checkersrallys from enforcing this provision. Therefore, franchisees facing financial difficulties should consult with legal counsel to understand their rights and protections under federal bankruptcy law.