Franchisors have used Chapter 11 bankruptcy to both restructure their debts and to demand concessions from franchisees. A new Supreme Court decision could take away, or at least blunt, this practice. 

In the past, it wasn’t uncommon for a franchisor to try and use a Chapter 11 bankruptcy filing to secure better terms for itself at the cost of its franchisees. For example, a franchisor might have old franchise agreements that require significant support services and contain royalty rates of 2-4%.  A franchisor filing for Chapter 11 might as well try to force upon franchisees contracts with no support obligations and 5-10% fees.