Under federal bankruptcy law, is the Checkersrallys Franchise Agreement's provision for termination upon bankruptcy always enforceable?

According to the 2025 Checkersrallys Franchise Disclosure Document, the enforceability of the franchise agreement's termination upon bankruptcy is not absolute and may be subject to federal bankruptcy law. Specifically, an addendum to the FDD for the state of Maryland states that while 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.).

This means that if a Checkersrallys franchisee in Maryland files for bankruptcy, the standard clause in the franchise agreement allowing Checkersrallys to terminate the agreement might not be automatically upheld in court. Federal bankruptcy law could override this provision, potentially allowing the franchisee to continue operating the business even under bankruptcy protection. This protection exists to give the franchisee an opportunity to reorganize their finances and continue operations.

For a prospective Checkersrallys franchisee, this information is crucial for understanding the protections and limitations in place should they face financial difficulties leading to bankruptcy. It is important to consult with a legal professional to fully understand the implications of federal bankruptcy law on the franchise agreement, especially in the state of Maryland. This also highlights the importance of understanding the specific addenda that apply to your state, as franchise laws can vary significantly.