What is the effect of the Michigan law on provisions in Beauty Bungalows franchise documents that are deemed unfair?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
MICHIGAN
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
(a) A prohibition on your right to join an association of franchisees.
(b) A requirement that you assent to a release, assignment, novation, waiver, or estoppel which deprives you of rights and protections provided in this act.
This shall not preclude you, after entering into a Franchise Agreement, from settling any and all claims.
- (c) A provision that permits us to terminate a Franchise prior to the expiration of itsterm exceptfor good cause.
Good cause shall include your failure to comply with any lawful provision of the FranchiseAgreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- (d) A provision that permits us to refuse to renew your Franchise without fairly compensatingyou by repurchase or other means for the fair market value at the time of expiration of your inventory, supplies, equipment, fixtures, and furnishings.
Personalized materials which have no value to us and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the Franchise business are not subject to compensation.
This subsection applies only if: (i) the term of the Franchise is less than five years; and (ii) you are prohibited by the Franchise Agreement or other agreementfrom continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the Franchise or you do not receive at least six months' advance notice of our intent not to renew the Franchise.
- (e) A provision that permits us to refuse to renew a Franchise on terms generally available to other franchisees of the same class or type under similar circumstances.
This section does not require a renewal provision.
- (f) A provision requiring that arbitration or litigation be conducted outside the State of Michigan.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, Michigan law prohibits certain unfair provisions that may appear in franchise documents. If any of these provisions are present, they are considered void and unenforceable against the franchisee.
Specifically, the following provisions are void and unenforceable in Michigan: prohibitions on joining a franchisee association; requirements to assent to releases or waivers that deprive franchisees of rights and protections under the law; provisions allowing Beauty Bungalows to terminate a franchise before its term expires without good cause (where 'good cause' is defined as failure to comply with the Franchise Agreement after a 30-day cure period); provisions allowing Beauty Bungalows to refuse renewal without fairly compensating the franchisee for the fair market value of inventory, supplies, equipment, fixtures, and furnishings (with exceptions for personalized materials or items not reasonably required for the business, and only if the franchise term is less than five years and the franchisee is restricted from operating a similar business afterward or does not receive six months' notice of non-renewal); provisions allowing Beauty Bungalows to refuse renewal on terms generally available to other franchisees; and provisions requiring arbitration or litigation to occur outside of Michigan.
This means that if a Beauty Bungalows franchisee operates in Michigan, certain clauses that might otherwise be standard in the franchise agreement will not be legally binding. This offers additional protection to the franchisee, ensuring they cannot be held to unfair terms regarding termination, renewal, association membership, and legal proceedings. Prospective franchisees in Michigan should carefully review the franchise agreement with legal counsel to ensure full understanding of their rights under Michigan law.