What happens if a Dryer Vent Squad franchisee files a voluntary petition in bankruptcy?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
Item 17, "Renewal, Termination, Transfer and Dispute Resolution," is supplemented, by the addition of the following:
- E. The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
Source: Item 23 — RECEIPTS (FDD pages 51–207)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad Franchise Disclosure Document, the franchise agreement provides for termination upon bankruptcy. However, the Maryland FDD Amendment notes that this provision may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
This means that while Dryer Vent Squad's standard franchise agreement allows them to terminate the agreement if a franchisee declares bankruptcy, federal law might override this clause. Federal bankruptcy laws are designed to give individuals and businesses a fresh start, which can include continuing to operate a business even under bankruptcy protection.
For a prospective Dryer Vent Squad franchisee, this has significant implications. If you are considering a franchise in Maryland, the enforceability of the termination clause is specifically questioned. Regardless of location, it would be prudent to consult with a legal expert to understand how federal bankruptcy laws would apply to your specific situation and to clarify the extent to which Dryer Vent Squad can enforce the termination clause in the event of bankruptcy.