What document governs the Secured Promissory Note for a Bath Tune Up franchise?

According to the 2025 Bath Tune Up FDD, the Secured Promissory Note is governed by the laws of the State of South Dakota, with a specific exception. The FDD states that the laws of the state where the Obligor (the franchisee) resides will govern the note for purposes of usury laws and determining the maximum allowable interest rate. This means that while South Dakota law generally applies, the franchisee's local state laws will take precedence when it comes to interest rate regulations.

This is a common practice in franchise agreements to ensure compliance with varying state-level financial regulations. Usury laws, which regulate the maximum amount of interest that can be charged on a loan, differ significantly from state to state. By deferring to the franchisee's state of residence on this specific issue, Bath Tune Up aims to avoid potential conflicts with local laws and protect both the franchisor and franchisee from legal challenges related to interest rates.

For a prospective Bath Tune Up franchisee, this clause provides a degree of protection by ensuring that the interest rate on the Secured Promissory Note complies with their local state laws. However, franchisees should still carefully review the terms of the note and consult with a legal or financial professional to fully understand their obligations and rights under the agreement, particularly regarding interest payments and potential default scenarios. Understanding the interplay between South Dakota law and their own state's usury laws is crucial for making informed financial decisions related to the franchise.