A recent decision in the In re RMH Franchise Holdings
bankruptcy case pending in the District of Delaware, highlights the
importance of complying with a contract's termination provision
before the contract counterparty files
for bankruptcy.
In RMH, Applebee's Restaurants LLC and
Applebee's Franchisor LLC (collectively,
"Applebee's") entered into 160 pre-petition franchise
agreements (the "Franchise Agreements") with the Debtors.
The Franchise Agreements, among other things, granted the Debtors
the right to use the Applebee's name, food recipes, operating
methods, and restaurant style, in exchange for a monthly royalty
fee and a percentage of gross sales. The Franchise Agreements were
governed by Kansas law.
