Your post made me wonder what obligations the franchisor has to each R&I franchisee.
I suppose you already knew the answer, but there is no obligation of any sort to provide marketing support.
The bankruptcy trustee has 60 days from the date of conversion to a Chapter 7 to assume or reject any executory contract such as the franchise agreements. He would presumably assume them only if either (a) there are no obligations of the franchisor under the franchise agreement that are unpalatable to the franchisor, or (b) someone (hi, Mr. Chessler) wants to purchase them and is willing to assume the franchisor's obligations.
I see only two reasons that the trustee/Chessler would not want to assume the franchise agreements, but they are big ones. First, there is a one-year warranty on the kiosk, so with the exception of those that were delivered prior to this time last year, there's a tail liability that may be significant (unless they are all performing - and continue to perform - like RoBo claims his are). Second, if a franchise agreement had additional as-yet-undelivered kiosks as part of it, you might not want to assume that obligation unless you had some (working) kiosks you can use to fulfill that obligation.
So, we have an interesting dilemma for Mr. Chessler here. If he assumes the franchise agreements in order to milk those tasty royalties, he may be biting off more than he wants to swallow. On the other hand, if he doesn't want to assume them, then the royalty obligation disappears in about another month. I suppose creative lawyers are working on other solutions that get Mr. Chessler a return on his invested capital without exposing him to potentially troublesome liabilities?
AI
