In Re Taylor Investment Partners Ii, LLC
533 B.R. 837 (2015)
Nature Of The Case
This section contains the nature of the case and procedural background.
Facts
Ps operate Moe's Southwestern Grill franchises. Pursuant to the franchise agreements, D is entitled to terminate the franchise agreements if certain defaults occur, including if Ps repeatedly fail to meet certain franchise standards. To that end, D performs unannounced Restaurant Operation and Standards Evaluations (ROSE). Failing two consecutive ROSE inspections places Ps in default with a 30-day opportunity to cure. If Ps fail three ROSE inspections in a 12-month period, D may terminate the franchise agreement without a cure period. D alleges Ps failed consecutive ROSE inspections in June and December of 2012. D placed Ps in default and conducted follow-up inspections in February of 2013, in which Ps again failed. After several termination deferrals, Ps and D arbitrated their dispute. The arbitrator recommended an additional inspection. P asserts Ps failed the final inspection. D sent a termination notice regarding the Decatur franchise agreement, giving Ps six months to sell or vacate. Ps filed their Chapter 11 petitions on January 22, 2015, shortly before the termination deadline. D argues, pursuant to 11 U.S.C. § 365(c), Ps may not assume the franchise agreements without D's consent, which it withholds.
Issues
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Holding & Decision
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Legal Analysis
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