What is the 'Bankruptcy Code' as defined in the Even Hotels agreement?

According to Even Hotels' 2025 Franchise Disclosure Document, the U.S. Bankruptcy Code is referenced in the context of amendments to the franchise agreement, particularly concerning the enforceability of certain provisions. Specifically, the amendments address paragraphs 11.C(1)(b) and (d) of the license agreement. These paragraphs are modified to include language clarifying that their enforceability is governed by the U.S. Bankruptcy Code and subject to the rulings of a competent court. This amendment applies to Even Hotels franchises issued in California, Virginia, Maryland, North Dakota, and Rhode Island. The U.S. Bankruptcy Code is defined as 11 U.S.C.A. Sec. 101 et seq. in the Even Hotels agreement.

This means that certain termination or default clauses within the Even Hotels franchise agreement may be affected by bankruptcy laws. A franchisee's ability to challenge the enforcement of these clauses during bankruptcy proceedings is explicitly acknowledged. The amendment ensures that the standard franchise agreement terms are interpreted in conjunction with federal bankruptcy regulations, providing a layer of protection for franchisees facing financial distress.

For a prospective Even Hotels franchisee, this information is crucial because it highlights the interplay between the franchise agreement and federal bankruptcy law. It suggests that franchisees should be aware of their rights and protections under the U.S. Bankruptcy Code, especially if they encounter financial difficulties during the term of their franchise agreement. Consulting with legal counsel experienced in both franchise law and bankruptcy law is advisable to fully understand the implications of these provisions.