What is the 'Bankruptcy Code' referring to in the Crowne Plaza agreement?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
In accordance with the provision under the U.S. Bankruptcy Code (11 U.S.C.A. Sec. 101 et seq.), paragraphs 11.C(1)(b) and (d) of the License shall be amended to include the following language: "Enforceability of this provision is a matter governed by the U.S. Bankruptcy Code and enforceability or nonenforceability is subject to that law and rulings of a court of competent jurisdiction."
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, the 'Bankruptcy Code' refers to the U.S. Bankruptcy Code (11 U.S.C.A. Sec. 101 et seq.). This code is relevant to the Crowne Plaza license agreement, specifically paragraphs 11.C(1)(b) and (d), which address certain conditions related to bankruptcy. The FDD includes amendments for franchisees in California, Maryland, North Dakota, Hawaii, Rhode Island, and Virginia.
The amendments state that the enforceability of provisions within paragraphs 11.C(1)(b) and (d) is governed by the U.S. Bankruptcy Code. This means that if a Crowne Plaza franchisee files for bankruptcy, the extent to which Crowne Plaza can enforce certain terms of the license agreement will be subject to the laws and rulings of the bankruptcy court. The specific terms in paragraphs 11.C(1)(b) and (d) are not detailed in the provided excerpts, but they likely pertain to the rights and obligations of both the franchisor and franchisee in the event of bankruptcy.
For a prospective Crowne Plaza franchisee, this means understanding the implications of the U.S. Bankruptcy Code on the franchise agreement is crucial. The franchisee's ability to protect their investment and continue operations during financial distress could depend on these bankruptcy provisions. It is advisable to seek legal counsel to fully understand these implications and how they might affect the franchisee's rights and responsibilities under the agreement.
The inclusion of these amendments highlights the importance of state-specific laws in franchising. Franchise agreements are often subject to both federal and state regulations, and these amendments ensure that the Crowne Plaza franchise agreement complies with the specific laws of California, Maryland, North Dakota, Hawaii, Rhode Island, and Virginia, particularly in relation to bankruptcy and franchisee rights. This underscores the need for franchisees to be aware of the legal landscape in their specific state and how it interacts with the franchise agreement.