Bankruptcy and Assignment of Franchise Agreements over Franchisor’s Objection: Response

In Counterpoint: Bankruptcy and Assignment of Franchise Agreements Over Franchisor’s Objection,¹ published in the Spring 2013 issue of the Journal, William J. Barrett disagreed with the analysis in my article, Assigning a Franchise Agreement over the Franchisor’s Objection: Bankruptcy May Make It Possible,² published in the Journal’s Fall 2012 issue. The Journal has granted me the opportunity to respond, for which I am grateful.

The counterpoint summarizes my article as a viewpoint piece offering up the opinion that a bankrupt franchisee has a “fair chance of compelling its franchise to accepting a replacement franchisee.” This is incorrect. In fact, the article states that successfully assuming and assigning a franchise agreement “could be an uphill legal battle and often requires a special set of circumstances,”³ and that a franchisor relying on established case law such as In re XMH Corp.,⁴ written by the in?uential jurist Richard Posner, is “arguing from a relative position of strength.”⁵ Moreover, the article does not offer any viewpoint in favor of franchisees or franchisors. Although the article discusses how a franchisee may be able to use bankruptcy law to assume and assign a franchise agreement, an equal amount of analysis is dedicated to how a franchisor could use bankruptcy law to prevent assignment.

1. William J. Barrett, Counterpoint: Bankruptcy and Assignment of Franchise Agreements Over Franchisor’s Objection, 32 FRANCHISE L.J. 247 (2013).
2. Jason B. Binford, Assigning a Franchise Agreement over the Franchisor’s Objection: Bankruptcy May Make It Possible, 32 FRANCHISE L.J. 71, 71 (Fall 2012).
3. Id. at 71.
4. 647 F.3d 690 (7th Cir. 2011).
5. Binford, supra note 2, at 71.

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