For Monicals Pizza franchises in the Commonwealth of Virginia, what specific section regarding franchisee bankruptcy may not be enforceable under federal bankruptcy law?

According to Monicals Pizza's 2025 Franchise Disclosure Document, for franchisees in the Commonwealth of Virginia, Section 16.2.1.11 of the Franchise Agreement, which pertains to the termination of the agreement upon the franchisee's bankruptcy, may not be enforceable under federal bankruptcy law. This is in reference to 11 U.S.C. Section 101, et seq., which governs bankruptcy proceedings at the federal level. This information is part of an addendum to the franchise agreement specific to Virginia.

This means that while the standard Monicals Pizza franchise agreement includes a clause allowing for termination if the franchisee declares bankruptcy, this clause might not hold up in court in Virginia due to federal law. Federal bankruptcy law could supersede this section of the franchise agreement, potentially preventing Monicals Pizza from terminating the agreement solely based on the franchisee's bankruptcy filing.

Prospective franchisees in Virginia should be aware of this caveat, as it could affect their rights and obligations in the event of financial distress. It is advisable to seek legal counsel to fully understand the implications of this provision and how federal bankruptcy law would apply in their specific circumstances. This also highlights the importance of understanding both the franchise agreement and any state-specific addenda, as they can significantly alter the terms of the franchise relationship.