How does the Epcon Communities Franchise Agreement address the enforceability of termination provisions upon franchisee bankruptcy?

According to the 2025 Epcon Communities Franchise Disclosure Document, the enforceability of termination provisions upon franchisee bankruptcy is specifically addressed in an addendum for the state of Maryland. This addendum modifies Section 13.1 of the Franchise Agreement, which concerns termination, by stating that the provision for termination upon bankruptcy may not be enforceable under federal bankruptcy law.

This modification is significant for prospective Epcon Communities franchisees in Maryland because it acknowledges the limitations that federal bankruptcy law places on the franchisor's ability to terminate a franchise agreement solely based on the franchisee's bankruptcy. Federal law generally protects debtors from certain actions by creditors, including the termination of contracts, during bankruptcy proceedings. This addendum ensures that franchisees in Maryland are aware that the standard termination clause in the Franchise Agreement may not be fully enforceable in a bankruptcy situation.

For franchisees outside of Maryland, the standard termination clause regarding bankruptcy in the Franchise Agreement would likely apply without this specific modification. However, even in those cases, federal bankruptcy law could still impact the enforceability of such provisions. Therefore, it is important for all prospective franchisees, regardless of their location, to understand the potential implications of bankruptcy law on their franchise agreement and to seek legal counsel to fully understand their rights and obligations.