Under what circumstance related to bankruptcy might the termination provision in the Floyds 99 Franchise Agreement not be enforceable?

According to the 2025 Floyds 99 Franchise Disclosure Document, the franchise agreement includes a provision that allows Floyds 99 to terminate the agreement if the franchisee declares bankruptcy. However, this termination provision may not be enforceable under federal bankruptcy law. Specifically, the FDD references 11 U.S.C.A. Sec. 101 et seq., which encompasses federal bankruptcy laws.

This means that if a Floyds 99 franchisee files for bankruptcy, the protections afforded to debtors under federal law could override the standard termination clause in the franchise agreement. Federal bankruptcy law is designed to give individuals and businesses a chance to reorganize or liquidate debts, and certain contractual rights that allow creditors (in this case, the franchisor) to seize assets or terminate agreements may be limited or stayed by the bankruptcy court.

For a prospective Floyds 99 franchisee, this is an important consideration. While the franchise agreement may state that bankruptcy is grounds for termination, the enforceability of that provision is subject to the interpretation and application of federal bankruptcy law. It is advisable to consult with a legal professional to fully understand the implications of bankruptcy on the franchise agreement and the rights of both the franchisor and franchisee in such a situation. The franchisee should be aware that the franchisor may try to enforce the termination clause, but a bankruptcy court could prevent that action.