Does the provision regarding termination upon bankruptcy in the Dog Haus Franchise Agreement always enforceable in Maryland?

According to Dog Haus's 2025 Franchise Disclosure Document, the franchise agreement includes a provision for termination upon the franchisee's bankruptcy. However, this provision might not be fully enforceable under federal bankruptcy law. Specifically, the document mentions that while Dog Haus will attempt to enforce the provision, its enforceability is subject to the constraints of the U.S. Bankruptcy Code (11 U.S.C. Sections 101 et seq.).

For a prospective Dog Haus franchisee in Maryland, this means that while the franchise agreement allows Dog Haus to terminate the agreement if the franchisee declares bankruptcy, federal law might offer some protection. The franchisor acknowledges that the bankruptcy clause's enforceability is not guaranteed and will be applied only to the extent permitted by law.

This acknowledgment is important because federal bankruptcy law often overrides contractual clauses that allow termination solely due to bankruptcy, aiming to give the debtor a chance to reorganize and continue operating. A potential franchisee should seek legal counsel to fully understand their rights and obligations under both the franchise agreement and federal bankruptcy law, especially concerning the circumstances under which Dog Haus could terminate the agreement due to bankruptcy.