Brown Rudnick LLP’s Post

In a new BRiefing, Tristan Axelrod and Samuel Wolf analyze a recent Michigan decision that highlights key contract drafting and bankruptcy principles in the rejection of franchise “bundled” sub-agreements. The authors noted that one of the most important tools in the Bankruptcy Code is the debtor’s power to reject executory contracts, agreements for which performance remains due to some extent from both sides. “Courts have long grappled with the meaning and effect of rejection of franchise and related intellectual property agreements because there are many ways to think about them,” they wrote. “Is a franchise agreement just a franchisee’s obligation to pay royalties while putting the franchisor’s mascot on a sign outside? Or has the franchisee purchased valuable trade secrets, client lists and other information in a one-time transaction?” Click image to read the full post.