What rights does Even Hotels have regarding amounts due to the franchisee in the event of bankruptcy?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary set forth in the above License Agreement ("License"), the following provisions shall supersede and apply to each License for an Even Hotel issued in the State of California:
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- In accordance with the provisions under the U.S. Bankruptcy Code (11 U.S.C.A. Sec. 101 et seq.), paragraphs 11.C(1)(b) and (d) of the License shall be amended to include the following language: "Enforceability of this provision is a matter governed by the US Bankruptcy Code and enforceability or nonenforceability is subject to that law and rulings of a court of competent jurisdiction."
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to the 2025 Even Hotels Franchise Disclosure Document, the franchisor's rights regarding amounts due in the event of a franchisee's bankruptcy are addressed with specific considerations for franchisees operating in California, Maryland, and Virginia. For these states, the standard provisions in the license agreement concerning the enforceability of certain clauses are explicitly made subject to the U.S. Bankruptcy Code.
Specifically, the FDD states that paragraphs 11.C(1)(b) and (d) of the License Agreement are amended to include the language: "Enforceability of this provision is a matter governed by the US Bankruptcy Code and enforceability or nonenforceability is subject to that law and rulings of a court of competent jurisdiction." This amendment ensures that the enforceability of these specific clauses, which likely pertain to financial obligations or termination rights, will be determined by bankruptcy law rather than being unilaterally enforced by Even Hotels.
This means that if an Even Hotels franchisee in California, Maryland, or Virginia files for bankruptcy, the bankruptcy court will decide whether Even Hotels can enforce certain provisions of the franchise agreement related to amounts owed. This provides a layer of protection for the franchisee, as the court will consider the franchisee's financial situation and the fairness of enforcing those specific clauses under bankruptcy law. Franchisees in other states may not have this explicit protection written into their agreements, highlighting the importance of understanding state-specific amendments to the franchise agreement.