The news today of Friendly Ice Cream Corp. filing for Chapter 11 bankruptcy protection may leave any franchise operator wondering: What happens if my parent company declares bankruptcy?
Given current economic conditions, it’s a prudent question to ask. In recent years, a number of chains have similarly declared bankruptcy, including Bennigan’s, Bakers Square and Mrs. Fields Cookies.
The quick answer is that you’ll likely face a great deal of uncertainty and anxiety if your franchisor encounters serious financial troubles. But if your parent company, like Friendly’s, seeks to reorganize, the bottom line is that a bankruptcy filing could actually turn out to be a positive event in the long term for franchisees. Read on…