Is the choice of law for Beard Papas subject to state law?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
| r. Non-competition covenants after the franchise is terminated or expires | 6, 17.E. | No involvement, ownership, or interest whatsoever for 24 months in any competing business in: your Designated Territory; a 25-mile radius of your Designated Territory; a 10-mile radius of the Designated Territory of any other Shop; and you must comply with confidentiality, non- disclosure and non-solicitation covenants. |
|---|---|---|
| s. Modification of the agreement | 18.L. | Requires writing signed by you and us, except for unilateral |
| changes that we may make to the Manuals or our unilateral | ||
| reduction of the scope of a restrictive covenant that we may | ||
| make in our discretion. | ||
| t. Integration/merger clauses | 18.M. | Only the terms of the Franchise Agreement and schedules to |
| the Franchise Agreement and the respective signed exhibits | ||
| to the Franchise Agreement are binding, subject to state | ||
| law. Nothing in any agreement is intended to disclaim the | ||
| express representations made in the Franchise Disclosure | ||
| Document, its exhibits, and amendments. | ||
| u. Dispute resolution by arbitration or mediation | 18.G. | Except for certain claims for injunctive relief, all disputes must first be submitted to non-binding mediation in Los Angeles County, California and, if mediation is unsuccessful, then to binding arbitration in Los Angeles County, California. This provision is subject to applicable state law. |
| v. Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation |
| proceedings must be conducted in, or closest to, state court | ||
| of general jurisdiction that is within or closest to Los | ||
| Angeles County, California or, if appropriate, the United | ||
| States District Court nearest to our corporate headquarters | ||
| at the time such action is filed. This provision is subject to | ||
| applicable state law. | ||
| w. Choice of law | 18.F. | California law will govern. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–51)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, the choice of law is subject to state law. Specifically, California law will govern the franchise agreement. However, this is explicitly subject to state law and as disclosed in Exhibit I of the Disclosure Document. This means that while Beard Papas specifies California law, certain state laws where the franchise operates may override or modify this provision.
This is a fairly standard clause in franchise agreements. The purpose of this clause is to ensure compliance with mandatory state-specific franchise laws, which can vary significantly. For example, some states have franchise relationship laws that protect franchisees from certain actions by the franchisor, regardless of what the franchise agreement says. These laws would take precedence over the choice of law provision.
For a prospective Beard Papas franchisee, this means you should be aware of the franchise laws in your specific state and how they might affect your agreement, even though the agreement states that California law governs. It would be prudent to consult with a franchise attorney in your state to understand your rights and obligations under both the franchise agreement and applicable state laws. Understanding these nuances can help protect your investment and ensure a smoother franchise operation.