What happens if a voluntary or involuntary bankruptcy petition is filed by or against a Remax franchisee or their owners?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
You will be in material default of an essential condition of this Agreement and we have the right to terminate this Agreement effective upon delivery of notice of termination to you and without providing an opportunity to cure, if:
- (6) a voluntary or involuntary petition in bankruptcy is filed by or against you or any of your Owners unless such petition is set aside, withdrawn or ceases to be in effect within 20 days of the date of any such filing;
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, the filing of a voluntary or involuntary bankruptcy petition by or against a franchisee or their owners constitutes a material default of the franchise agreement. This gives Remax the right to terminate the agreement.
Remax can terminate the franchise agreement immediately upon delivering a termination notice to the franchisee, and without providing an opportunity to cure the default. However, this termination right is contingent on the bankruptcy petition not being set aside, withdrawn, or ceasing to be in effect within 20 days of the filing date.
This clause protects Remax from the instability and potential damage to its brand that could arise from a franchisee's bankruptcy. It allows Remax to quickly sever ties with a franchisee facing financial difficulties, but it also provides a short window for the franchisee to resolve the bankruptcy issue and maintain the franchise agreement.