For Alloy franchises in Rhode Island, what happens if a provision in the Franchise Agreement restricts jurisdiction or venue to a forum outside of Rhode Island?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
pt to an assignee who in good faith and judgment of the franchisor, is willing and financially able to assume the franchisor's obligations under the Franchise Agreement.
- The following is added to the end of the "Summary" sections of Item 17(v), titled "Choice of forum", and Item 17(w), titled "Choice of law":
The foregoing choice of law should not be considered a waiver of any right conferred upon the franchisor or upon the franchisee by Article 33 of the General Business Law of the State of New York.
RHODE ISLAND ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT
The following information applies to franchises and franchisees subject to Rhode Island statutes and regulations. Item numbers correspondence to those in the main body.
Item 17
The Rhode Island Franchise Investment Act at Section 19-28.1-14 provides that "a provision in a franchise agreement restricting jurisdiction or venue to a forum outside of this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act."
ADDENDUM TO THE FRANCHISE AGREEMENT REQUIRED FOR RHODE ISLAND FRANCHISEES
This Addendum pertains to franchises sold in the State of Rhode Island and is for the purpose of complying with Rhode Island statutes and regulations.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the Rhode Island Franchise Investment Act addresses provisions in the franchise agreement that restrict jurisdiction or venue to a forum outside of Rhode Island. Specifically, Section 19-28.1-14 of the Act states that any such provision is void with respect to a claim otherwise enforceable under the Act. This means that if an Alloy franchisee in Rhode Island has a claim enforceable under the Rhode Island Franchise Investment Act, they cannot be forced to litigate that claim in a different state or under the laws of another state, regardless of what the franchise agreement might say.
To ensure compliance with Rhode Island law, Alloy includes an addendum to the franchise agreement for franchisees in Rhode Island. This addendum explicitly states that if any provision in the franchise agreement is inconsistent with the Rhode Island Franchise Investment Act, the provisions of the Act will take precedence. The addendum also clarifies that Rhode Island law will govern any claim between the parties that alleges a violation of the Act. This addendum serves to protect the rights of Alloy franchisees in Rhode Island and ensures that they are not subject to unfair or restrictive provisions in the franchise agreement.
In practical terms, this means that an Alloy franchisee in Rhode Island can pursue legal claims related to their franchise within the state's jurisdiction, under Rhode Island law, without being bound by clauses in the franchise agreement that might otherwise require them to litigate elsewhere. This provides a level of legal protection and convenience for franchisees operating in Rhode Island, as they can resolve disputes locally and under familiar legal frameworks. This is a significant benefit for prospective franchisees in Rhode Island, as it reduces the potential burden and cost of resolving legal issues related to their franchise.