Regarding the Crave Cookies Franchise Agreement, is the provision for termination upon the franchisee's bankruptcy always enforceable in Maryland?

According to the 2025 Crave Cookies Franchise Disclosure Document, the enforceability of the franchise agreement's termination provision upon the franchisee's bankruptcy is not guaranteed. Specifically, the Minnesota Addendum states that a similar provision "may not be enforceable under federal bankruptcy law." While this statement is made within the context of Minnesota law, it raises a broader question about the general enforceability of such clauses, as federal bankruptcy law applies nationwide.

For a prospective Crave Cookies franchisee in Maryland, this means that while the franchise agreement may state that bankruptcy is grounds for termination, a court might not uphold this provision if the franchisee files for bankruptcy. Federal bankruptcy law is designed to provide debtors with certain protections, and automatic termination clauses can sometimes be overridden to allow the franchisee to reorganize their finances and continue operating the business.

Therefore, a potential franchisee should not assume that filing for bankruptcy will automatically lead to the termination of their Crave Cookies franchise. However, they should also be aware that the franchisor may still attempt to enforce the termination clause, which could lead to legal disputes. It would be prudent for a prospective franchisee to seek legal counsel to fully understand their rights and obligations in the event of bankruptcy. They should ask Crave Cookies about their past practices regarding franchise terminations due to bankruptcy and under what specific circumstances they have pursued or waived such terminations.