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In re Taylor Investment Partners II, LLC

533 B.R. 837 (2015)

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In re Taylor Investment Partners II, LLC

United States Bankruptcy Court for the Northern District of Georgia

533 B.R. 837 (2015)

Facts

Taylor Investment Partners II, LLC (Taylor) (debtor) was the franchisee of record for two Moe’s Southwestern Grill restaurants in Georgia. Taylor’s affiliate TIP II-Ansley, LLC operated the Moe’s franchise in Atlanta, and Taylor’s affiliate TIP II-Suburban, LLC operated the Moe’s franchise in Decatur. To ensure that franchisees’ restaurants were complying with the company’s standards, Moe’s conducted unannounced inspections of the restaurants. Taylor’s franchise agreement provided that the agreement could be terminated if Taylor’s restaurants repeatedly failed to meet the standards set by Moe’s. After Taylor’s Decatur location failed numerous inspections, Moe’s sent Taylor a termination notice for the franchise. The notice gave Taylor six months to sell or vacate the premises. Before the six-month termination period had expired, Taylor filed a chapter 11 bankruptcy petition. Moe’s filed a motion in the bankruptcy proceeding seeking relief from the automatic stay to be able to terminate the franchise agreement. Moe’s argued that section 365(c) of the Bankruptcy Code prohibited Taylor, as debtor in possession, from assuming the franchise agreement without consent from Moe’s, and Moe’s refused to consent to the assumption.

Rule of Law

Issue

Holding and Reasoning (Murphy, J.)

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