factual

Under what circumstances does an Auntie Annes franchisee NOT have the right to terminate the Franchise Agreement?

Auntie_Annes Franchise · 2024 FDD

Answer from 2024 FDD Document

tment Law."

    1. Section 20 (Miscellaneous) of the Franchise Agreement is supplemented by the addition of the following Section, which is considered an integral part of the Agreement:
    • 20.8 The general release language in this Agreement will not relieve us or any other person, directly or indirectly, from liability imposed by the Hawaii Franchise Investment Law.
    1. The Hawaii Franchise Investment Law provides rights to you on nonrenewal, termination and transfer of the Agreement. If any of the provisions of the Franchise Agreement on termination are inconsistent with the Hawaii Franchise Investment Law, then this will apply.
    1. Section 21.2 (Acknowledgements in Certain States) of the Franchise Agreement is hereby deleted.

ILLINOIS ADDENDUM TO FRANCHISE AGREEMENT

In recognition of the requirements of the Illinois Franchise Disclosure Act of 1987, Ill. Comp. Stat. §§ 705/1 through 705/44, the Franchise Agreement, for franchises offered and sold in the State of Illinois or to Illinois residents, is amended to include the following:

    1. The provisions of the Franchise Agreement on governing law, jurisdiction, and choice of law will not be a waiver of any right conferred on you by the Illinois Franchise Disclosure Act. Illinois law will govern the Franchise Agreement with respect to Illinois franchisees. Consistent with the foregoing, any provision in the Franchise Agreement that designates jurisdiction and venue in a forum outside of Illinois is void with respect to any cause of action that is otherwise enforceable in Illinois.
    1. 815 ILCS § 705/41 (Illinois Franchise Disclosure Act) states that "any condition, stipulation, or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of this Act or any other law of this State is void."
    1. Section 21.1 (Your Acknowledgements) is deleted from all Illinois Franchise Agreements.

INDIANA ADDENDUM TO FRANCHISE AGREEMENT

In recognition of the requirements of the Indiana Deceptive Franchise Practices Law, Indiana Code §§ 23-2-2.7-1 through 23-2-2.7-10, and the Indiana Franchise Disclosure Law, Indiana Code §§ 23-2-2-2.5-1 through 23-2-2-2.5-51, the Franchise Agreement, for franchises offered and sold in the State of Indiana or to Indiana residents, is amended to include the following:

    1. The laws of the State of Indiana supersede any provisions of the Franchise Agreement, or Georgia law if these provisions are in conflict with Indiana law. The Franchise Agreement will be governed by Indiana law, rather than Georgia law as stated in Section 22.5 (Applicable Law) of the Franchise Agreement.
    1. Venue for litigation will not be limited to Georgia, as specified in Section 19.1 (Dispute Resolution) of the Franchise Agreement.
    1. The prohibition by Indiana Code 23-2-2.7-1(7) against unilateral termination of the franchise without good cause or in bad faith, good cause being defined therein as "a material breach of the franchise agreement," will supersede the provisions of Section 17 (Default and Termination) of the Franchise Agreement in the State of Indiana to the extent they may be inconsistent with this prohibition.
    1. No release language stated in the Franchise Agreement will relieve us or any other person, directly or indirectly, from liability imposed by the laws on franchising of the State of Indiana.
    1. Section 15.4.B. (Post-Term) of the Franchise Agreement is revised to limit the geographical extent of the post-term covenant not to compete to an area of reasonable size for all franchises sold in the State of Indiana.
    1. Section 15.5 (Remedies) of the Franchise Agreement will not apply to franchises offered and sold in the State of Indiana.
    1. Notwithstanding the terms of Section 4 (Territorial Rights) of the Franchise Agreement, we will not compete unfairly with you within a reasonable area.

Source: Item 22 — CONTRACTS (FDD page 106)

What This Means (2024 FDD)

According to Auntie Anne's 2024 Franchise Disclosure Document, a franchisee's right to terminate the Franchise Agreement is subject to state-specific laws that may supersede the agreement's provisions. For instance, the Illinois Franchise Disclosure Act states that any condition that binds a person acquiring a franchise to waive compliance with any provision of the Act or any other law of the state is void. This means an Auntie Anne's franchisee in Illinois cannot waive their rights under Illinois law, which may affect their ability to terminate the agreement. Similarly, the New York addendum specifies that franchisees may terminate the Franchise Agreement on any grounds available by law, reinforcing the franchisee's rights under applicable laws.

In Indiana, the Indiana Franchise Disclosure Law and the Indiana Deceptive Franchise Practices Act also influence the termination conditions. Specifically, the prohibition against unilateral termination of the franchise without good cause or in bad faith supersedes any contrary provisions in the Franchise Agreement. This implies that Auntie Anne's cannot terminate the agreement without demonstrating a material breach by the franchisee. Additionally, in Virginia, it is unlawful for a franchisor to cancel a franchise without reasonable cause, and any grounds for default or termination stated in the franchise agreement that do not constitute "reasonable cause" may not be enforceable.

In Washington, the Washington Franchise Investment Protection Act ensures that its provisions prevail over any inconsistent terms in the Disclosure Document or Franchise Agreement. This includes areas of termination and renewal, meaning that Washington state law and court decisions can supersede the Franchise Agreement in the franchisee's relationship with Auntie Anne's. Therefore, prospective Auntie Anne's franchisees need to be aware of the specific state laws governing franchise agreements in their area, as these laws can significantly impact their rights and obligations regarding termination.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.