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

According to the 2025 Monicals Pizza Franchise Disclosure Document, a specific termination provision within the Franchise Agreement may not be enforceable under certain circumstances related to bankruptcy. Specifically, Section 16.2.1.11 of the Franchise Agreement, which allows Monicals Pizza to terminate the agreement if the franchisee declares bankruptcy, may not be enforceable under federal bankruptcy law, as outlined in 11 U.S.C. Section 101, et seq. This information is provided in an addendum to the Franchise Agreement specifically for franchisees in the Commonwealth of Virginia.

This means that if a Monicals Pizza franchisee in Virginia files for bankruptcy, Monicals Pizza's right to automatically terminate the franchise agreement might be restricted by federal law. Federal bankruptcy law could override the termination clause in the franchise agreement, potentially allowing the franchisee to continue operating the Monicals Pizza restaurant under bankruptcy protection.

It is important for prospective franchisees in Virginia to understand the interplay between the franchise agreement's termination clauses and federal bankruptcy law. Franchisees should seek legal counsel to fully understand their rights and obligations in the event of financial distress and bankruptcy. This addendum serves as a critical disclosure, alerting potential franchisees to a legal complexity that could significantly impact their investment and operational control.