What section of the City Publications Franchise Agreement terminates the agreement upon the bankruptcy of the Franchisee?

According to the 2025 City Publications Franchise Disclosure Document, Section 18B1.h of the Franchise Agreement allows for termination of the agreement upon the franchisee's bankruptcy. However, the FDD includes amendments for certain states that address the enforceability of this section.

Specifically, the FDD states that for franchisees in Maryland and Virginia, Section 18B1.h of the Franchise Agreement, which allows City Publications to terminate the agreement if the franchisee declares bankruptcy, may not be enforceable under federal bankruptcy law. This is due to federal bankruptcy laws (11 U.S.C. Section 101, et seq.) which may supersede the franchise agreement terms.

Similarly, for franchisees in California, the California Franchise Relations Act may supersede provisions in the Franchise Agreement, specifically Sections 5.B and 19, and that Section 18B.1.h of the Franchise Agreement which terminates the Franchise Agreement upon the bankruptcy of the Franchisee may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).

Prospective franchisees should consult with legal counsel to understand the implications of these clauses and how federal and state laws may affect the enforceability of the termination provisions in the event of bankruptcy. This is particularly important for franchisees in Maryland, Virginia, and California, where the FDD explicitly mentions potential conflicts with federal bankruptcy law and state franchise laws.