In Maryland, is the Desi District Franchise Agreement provision for termination upon bankruptcy of the franchisee always enforceable?

According to the 2024 Desi District Franchise Disclosure Document, the enforceability of the franchise agreement's termination provision upon the franchisee's bankruptcy in Maryland is not absolute. The Maryland Rider to the Franchise Agreement includes stipulations that address franchisee rights and waivers under Maryland law.

Specifically, while the Franchise Agreement allows for termination upon franchisee bankruptcy, the disclosure indicates that this provision may not be enforceable under federal bankruptcy law. This suggests that federal law could supersede the terms of the franchise agreement in bankruptcy proceedings, potentially preventing Desi District from terminating the agreement solely based on the franchisee's bankruptcy.

This means a prospective Desi District franchisee in Maryland should be aware that federal bankruptcy laws could provide some protection against termination of their franchise agreement in the event of bankruptcy. However, it is essential to seek legal counsel to fully understand the interplay between the franchise agreement, Maryland law, and federal bankruptcy law to assess their rights and obligations in such a situation.