In Maryland, does the agreement for Focalpoint Coaching provide for termination upon bankruptcy, and is this provision fully enforceable?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
- Insolvency. The following language is added to the end of Section 14.B.(18) of the Franchise Agreement:
; termination upon insolvency might not be enforceable under federal insolvency law (11 U.S.C. Sections 101 et seq.), but we and you agree to enforce this provision to the maximum extent the law allows.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to the 2025 Focalpoint Coaching Franchise Disclosure Document, the Franchise Agreement does provide for termination upon franchisee insolvency in Maryland. However, the FDD states that this provision might not be fully enforceable under federal insolvency law (11 U.S.C. Sections 101 et seq.).
Specifically for Maryland franchisees, Focalpoint Coaching includes a rider to the standard Franchise Agreement. This rider modifies Section 14.B.(18) of the Franchise Agreement, which addresses termination upon insolvency. The added language acknowledges the potential unenforceability under federal law but expresses the intent of both Focalpoint Coaching and the franchisee to enforce the provision to the maximum extent the law allows.
This means that while Focalpoint Coaching aims to terminate the agreement if a franchisee becomes insolvent, federal law might override this provision, offering some protection to the franchisee. A prospective franchisee should consult with a legal professional to fully understand the implications of federal insolvency law and how it interacts with the termination clause in the Franchise Agreement, especially in the state of Maryland.