What constitutes 'reasonable cause' for termination of an All Team franchise agreement in Virginia?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
The following is added to Item 17.h. of the FDD, and corresponding provisions in the Franchise Agreement and Area Development Agreement:
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the definition of 'reasonable cause' for franchise termination in Virginia is determined by the Virginia Retail Franchising Act. The FDD states that if any grounds for default or termination outlined in the Franchise Agreement do not meet the standard of 'reasonable cause' as defined by Virginia law, then that specific provision may not be enforceable. This means that while the All Team franchise agreement lists various reasons for termination, those reasons must align with Virginia law to be legally valid in Virginia.
This addendum ensures that All Team franchisees in Virginia are protected by the state's franchise laws, which may offer greater protection than the standard franchise agreement. It prevents All Team from enforcing termination clauses that are deemed unreasonable under Virginia law. The FDD also clarifies that no statement or acknowledgement signed by a franchisee can waive their rights under Virginia franchise law, including claims of fraud or reliance on statements made by All Team.
For a prospective All Team franchisee in Virginia, this means the Virginia Retail Franchising Act takes precedence over the standard franchise agreement in case of inconsistencies. Franchisees should familiarize themselves with the Virginia Retail Franchising Act to understand their rights and protections regarding franchise termination. It would be prudent for a prospective franchisee to seek legal counsel to fully understand the implications of this addendum and how it interacts with the franchise agreement.