What is the governing law for the Bath Tune Up Secured Promissory Note?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of South Dakota, except that for purposes of the usury laws (and determining the maximum rate of interest allowable), this Note shall be governed by and construed and enforced in accordance with the laws of the state of Obligor's residence.
Source: Item 23 — RECEIPTS (FDD pages 52–222)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up FDD, the Secured Promissory Note is generally governed by the laws of South Dakota. However, there is an exception regarding usury laws. For the purpose of usury laws and determining the maximum allowable interest rate, the note is governed by the laws of the state where the person taking out the loan (Obligor) resides.
This means that while most aspects of the Secured Promissory Note will be interpreted under South Dakota law, the interest rate charged must comply with the usury laws of the franchisee's state of residence. Usury laws are designed to protect borrowers from excessively high interest rates.
For a Bath Tune Up franchisee, this is important because the maximum interest rate they can be charged on the Secured Promissory Note will depend on their state's usury laws. They should be aware of the usury laws in their state to ensure that the interest rate on the note is compliant. It is advisable to consult with a legal professional to understand the implications of these governing laws fully.