Q&As

What considerations should practitioners be taking into account when deciding whether or not the provisions on ipso facto clauses introduced by the Corporate Insolvency and Governance Act 2020 apply to franchise agreements?

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Published on LexisPSL on 14/09/2020

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • What considerations should practitioners be taking into account when deciding whether or not the provisions on ipso facto clauses introduced by the Corporate Insolvency and Governance Act 2020 apply to franchise agreements?
  • Termination for insolvency
  • During insolvency
  • Small entity exemption
  • Other ways to make termination happen

What considerations should practitioners be taking into account when deciding whether or not the provisions on ipso facto clauses introduced by the Corporate Insolvency and Governance Act 2020 apply to franchise agreements?

Termination for insolvency

Most typical franchise agreements involve the provision of support by the franchisor to the franchisee and will have a clause which gives the franchisor a right upon the insolvency of the franchisee to automatically or by notice bring the franchise agreement (and likewise the franchisors obligations to continue supporting such franchisee) to an end.

In such circumstances, unless able to fall within an exemption, the franchisor will (subject to the small entity exemption) be unable to enforce its termination clause against the

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