Under what conditions can a Beauty Bungalows franchisee agree to conduct arbitration outside of Michigan?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 18.11 of the Franchise Agreement shall not apply to Washington Franchisees.
WISCONSIN
The Wisconsin Fair Dealership Law, Chapter 135 of the Wisconsin Statutes supersedes any provision of the Franchise Agreement if such provision is in conflict with that law. The Franchise Disclosure Document, the Franchise Agreement and the Supplemental Agreements are amended accordingly.
RHODE ISLAND
§ 19-28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act." The FDD, the Franchise Agreement, and the Supplemental Agreements are amended accordingly to the extent required by law.
The above language has been included in this FDD as a condition to registration. The Franchisor and the Franchisee do not agree with the above language and believe that each of the provisions of the Franchise Agreement and the Supplemental Agreements, including all choice of law provisions, are fully enforceable. The Franchisor and the Franchisee intend to fully enforce all of the provisions of the Franchise Agreement, the Supplemental Agreements, and all other documents signed by them, including, but not limited to, all venue, choice-of-law, arbitration provisions and other dispute avoidance and resolution provisions and to rely on federal pre-emption under the Federal Arbitration Act.
VIRGINIA
Item 17(h). The following is added to Item 17(h):
"Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to use undue influence to induce a franchisee to surrender any right given to him under the franchise. If any provision of the Franchise Agreement or Supplemental Agreements involve the use of undue influence by the Franchisor to induce a franchisee to surrender any rights given to franchisee under the Franchise, that provision may not be enforceable."
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
Based on the 2025 Beauty Bungalows Franchise Disclosure Document, Section 18.11 of the Franchise Agreement does not apply to franchisees in Washington. This implies that the standard arbitration clause, which likely mandates arbitration in a specific location (potentially outside of Washington), is not enforceable for Washington franchisees.
For franchisees in Rhode Island, the Rhode Island Franchise Investment Act states that any provision in a franchise agreement that restricts jurisdiction or venue to a forum outside of Rhode Island, or requires the application of laws from another state, is void with respect to claims enforceable under that act. However, Beauty Bungalows includes language in their FDD that they do not agree with this provision and intend to enforce all venue, choice-of-law, and arbitration provisions to the fullest extent, relying on federal pre-emption under the Federal Arbitration Act. This creates a potential legal conflict for Rhode Island franchisees.
For Virginia franchisees, the Virginia Retail Franchising Act makes it unlawful for Beauty Bungalows to use undue influence to induce a franchisee to surrender any right given to them under the franchise. If any provision involves such undue influence, it may not be enforceable. This could potentially affect the enforceability of an arbitration clause outside of Virginia if it's deemed that agreeing to it involved undue influence.
For franchisees in Wisconsin, the Wisconsin Fair Dealership Law supersedes any conflicting provision in the Franchise Agreement. This means that if the arbitration clause conflicts with Wisconsin law, the state law will take precedence. Therefore, a Beauty Bungalows franchisee's ability to agree to arbitration outside of Michigan depends heavily on the specific state laws and the interpretation of those laws in relation to the franchise agreement.