Does the All States M.E.D. franchise agreement allow franchise laws to apply regardless of jurisdictional requirements?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
6. Dispute Resolution
- a) Choice of Law. Except as to claims governed by federal law, the local law where the Franchised Business is located governs all claims that in any way relate to or arise out of this Agreement or any of the dealings of the parties ("Claims"). However, no laws regulating the sale of franchises or governing the relationship between franchisor and franchisee shall apply unless the jurisdictional requirements of such laws are met independently of this paragraph.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, the franchise agreement's enforcement varies by jurisdiction. Generally, the local law where the franchised business is located governs claims related to the agreement, except for claims governed by federal law. However, state franchise laws apply only if their jurisdictional requirements are met independently of the agreement's general choice-of-law clause. This means that the standard choice-of-law provision in the All States M.E.D. agreement does not automatically trigger the application of a state's franchise laws unless those laws would otherwise apply.
Several addenda modify the standard agreement to comply with specific state laws. For example, in Illinois and North Dakota, any provision requiring a franchisee to waive compliance with state franchise laws is void. Similarly, no statement signed by a franchisee can waive claims under state franchise law or disclaim reliance on franchisor statements. In Rhode Island, the franchise agreement cannot restrict a franchisee's choice of jurisdiction or venue. These addenda ensure that franchisees in these states retain the protections afforded to them under their respective state franchise laws, regardless of what the standard All States M.E.D. agreement might say.
In California, certain provisions of the All States M.E.D. franchise agreement, such as those requiring binding arbitration in Florida, covenants not to compete extending beyond the franchise term, and the application of Florida laws, may not be enforceable. Additionally, California law voids any waiver of rights under the Franchise Investment Law or the Franchise Relations Act. These stipulations highlight the importance of franchisees understanding the specific addenda applicable to their state and how those addenda modify the general terms of the franchise agreement. Prospective franchisees should consult with legal counsel to fully understand their rights and obligations in their specific jurisdiction.