In case of failure

In case of failure of any company, the main purpose of bankruptcy is to form the "passive state" of society, to realize the bankruptcy assets and proceed to the bankruptcy assets division allowing creditors to participate in the asset allocation in proportion to his claim. Unlike the case in which to fail is a company that has developed its business in franchise. The franchise company should be considered as the result of a set of uniformly assessed aspects that made possible the formation of the network. It must be evaluated economically all those aspects that have allowed the expansion of the original idea developed in franchise and allowed the franchisor to acquire a advantage market position a to transfer their affiliates this advantage. Thus become a unified economic value considering the original idea, know-how from the experience, and network coverage and advertising investments faced by the entrepreneur.

Careful
In case of failure of the franchisor is essential to assess whether it is convenient, economically more advantageous to find the right way to maintain the goodwill (and consequently the economic value) of the network, aimed at the subsequent sale of the company as a whole and the clearance creditors, or if you can not help but clearing the creditors to realize the bankruptcy asset with individual assets of the company taken from the franchisor, regardless of goodwill of the business franchise.
Before you must verify whether there are rules directly appliable to the franchise agreement, which will allow them to continue in the event of bankruptcy of the franchisor. Franchising is characterized by atypical items than typical contracts such as office, administration, contracts, leases, etc.. The bankruptcy law is not specifically identified by any specific legislation but, due to the interruption of services provided by the franchisor, following the declaration of bankruptcy, it is considered that also franchises that bound franchisor to its affiliates can be solved. The consequences for the franchisee would be in a nutshell: the termination of the obligations of an economic nature (such as payment of royalties) and termination obligations of conduct (according to the network, not competition, establishment of local advertising campaigns, exclusive purchasing, etc. . Contextually, however, also means the cessation of rights to use the mark, for assistance by the franchisor, etc..

From the Law
Under the bankruptcy law is possible to identify an alternative to immediate termination of reciprocal trade in goods and services between parts of the franchise agreement: the continuation of the temporary exercise of the bankrupt. The liquidator may, therefore, proceed on a provisional basis in view of the subsequent sale of the franchise, regardless of the failure of the entrepreneur who had given birth, or subsequent liquidation. The franchisee will have the opportunity to continue its activity as a member pending the sale of the business franchise to a third party purchaser. Even he can buy the network from failure alone or together with other franchisees. The affiliate who has regularly provided the services provided to bear the franchise agreement may require in turn the performance by the franchisor failed (sneaking in the insolvency and contributing to the division of assets with other creditors), or declare the termination for default of the contractor failed (thereby entitled to compensation) or impossibility of performance. The franchisee must take into account that he will lose the right to use the franchisor's brand and then use the mark as shown and should think of a new brand with appealing communication s proper to the market. To avoid such circumstances, the franchisee may, however, possibly in association with other affiliates of the same franchised network procedure to be used with the intended receiver, for example, purchase or acquisition of ownership of trademark law 's uses. Depending on the type of acquisition negotiations agreed with the trustee in bankruptcy, the franchisee will therefore continue its economic initiative with the same mark, or even when buying the brand, no longer continue to operate as an affiliate of the franchise network but as the franchisor of the same network, aiming later expansion thereof.