What section of the U.S. Code addresses bankruptcy law and its potential impact on Ledgers franchise agreements?

According to the 2025 Ledgers Franchise Disclosure Document, the section of the U.S. Code that addresses bankruptcy law and its potential impact on Ledgers franchise agreements is Title 11, Section 101 et seq.

Specifically, the FDD notes that the standard Ledgers Franchise Agreement allows for termination of the agreement upon the franchisee's bankruptcy. However, the disclosure indicates that this provision may not be enforceable under federal bankruptcy law. This means that despite the franchise agreement's terms, a bankruptcy court might not allow Ledgers to terminate the agreement solely due to the franchisee's bankruptcy.

This information is particularly relevant for prospective franchisees as it clarifies the interplay between the franchise agreement and federal bankruptcy law. While the agreement may state that bankruptcy is grounds for termination, federal law could override this provision, offering some protection to franchisees facing financial difficulties. Franchisees in California should be aware of this conflict and seek legal counsel to understand their rights fully.