What specific provisions in the Afuri Ramen Dumpling franchise documents are void for Michigan franchisees?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
The State of Michigan prohibits certain unfair provisions that are sometimes in franchise documents. If any of the following provisions are included in these franchise documents, the provisions are void for Michigan franchisees and cannot be enforced against Michigan franchisees. These provisions are:
(a) A prohibition on the right of a franchisee to join an association of franchisees.
(b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in the Michigan Franchise investment law.
This will not preclude a franchisee, after entering into a Franchise Agreement, from settling any and all claims.
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
Good cause will include the failure of the franchisee to comply with any lawful provision of the Franchise Agreement and to cure the failure after being given written notice and a reasonable opportunity, which in no event need be more than 30 days, to cure the failure.
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings.
Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation.
This subsection applies only if:
- (i) The term of the franchise is less than 5 years, and
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, certain provisions are unenforceable for franchisees in Michigan due to state law. Specifically, Michigan law voids provisions within the franchise agreement that infringe upon a franchisee's rights and protections under the Michigan Franchise Investment Law.
These unenforceable provisions include any prohibition on a franchisee's right to join an association of franchisees, ensuring franchisees can collectively organize and advocate for their interests. Additionally, any requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel that deprives them of rights and protections under the Michigan Franchise Investment Law is void. However, Michigan law does allow a franchisee to settle claims after entering into a Franchise Agreement.
Furthermore, Afuri Ramen Dumpling cannot terminate a franchise before its term expires unless there is good cause, which includes the franchisee's failure to comply with the Franchise Agreement, provided they are given written notice and a reasonable opportunity (up to 30 days) to correct the failure. Lastly, any provision that allows Afuri Ramen Dumpling to refuse renewal of a franchise without fairly compensating the franchisee for the fair market value of their inventory, supplies, equipment, fixtures, and furnishings is void. This compensation does not extend to personalized materials with no value to the franchisor or items not reasonably required for the franchise business, and this protection applies only if the franchise term is less than 5 years.