Which state's laws govern the Aw Agreement and franchise, and under what conditions does this change?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (b) We shall have the right to proceed by judicial process in lieu of arbitration to enforce your obligations to pay us under Section 10 of this Agreement and to seek collection of such fees due and owing to us.
- 18.4 Governing Law/Consent to Jurisdiction. All matters relating to arbitration shall be governed by the Federal Arbitration Act (9 U.S.C. Section 1 et. seq.). Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et. seq.) or other federal law, this Agreement and franchise shall be governed by the laws of the State
of Illinois except to the extent that the law of the state in which your Papa Ray's Pizza Restaurant is located requires that it be governed by the laws of such state. To the extent any claim shall not be arbitrated as provided in Section 18.3, you irrevocably submit to the exclusive jurisdiction of any state or federal court of jurisdiction located in the State of Illinois and you (and your Owners) irrevocably submit to the exclusive jurisdiction of such court and waive any objection you may have to either the jurisdiction or venue of such court. You agree to the exclusive jurisdiction of such courts and agree not to sue us regarding any matter relating in any way to this Agreement except in such courts.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the Franchise Agreement and franchise are generally governed by the laws of the state shown on the first page of the agreement. However, this is subject to exceptions for matters governed by the United States Trademark Act of 1946 (Lanham Act) or other federal law. This means that while state law typically applies, federal law takes precedence in specific areas like trademark protection.
For franchisees in Illinois, the FDD includes a specific addendum modifying the agreement. The Illinois addendum states that Illinois law shall apply to and govern the Franchise Agreement. This addendum also specifies that any provision designating jurisdiction and venue outside of Illinois is void, although arbitration may still take place outside of the state.
This means that for Aw franchisees, the governing law depends on the franchisee's location. In most states, the law of the state listed on the first page of the agreement applies, except where federal law governs. However, for franchisees in Illinois, Illinois law specifically governs the agreement, regardless of what the main agreement states. Prospective franchisees should carefully review the state addendum (Exhibit F) to understand how the Franchise Agreement may be modified by their state's laws.