Under what conditions might a default or termination provision in the Best Western membership agreement be unenforceable in Virginia, according to Section 13.1-564 of the Virginia Retail Franchising Act?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the "Summary" section of Item 17(h), entitled "Cause" defined – non-curable defaults, is amended by adding the following:
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the membership agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, Section 13.1-564 of the Virginia Retail Franchising Act restricts franchisors from canceling a franchise without "reasonable cause." Therefore, if any of the default or termination grounds outlined in the Best Western membership agreement do not meet the definition of "reasonable cause" under Virginia law, that specific provision may not be enforceable in Virginia. This means Best Western must have a legally sound and justifiable reason for terminating a franchise agreement in Virginia.
For a prospective Best Western franchisee in Virginia, this provides a degree of protection against arbitrary or unfair termination. It ensures that Best Western cannot terminate the agreement based on trivial or unsubstantiated reasons. The franchisee has the right to argue that the grounds for termination cited by Best Western do not constitute "reasonable cause" as defined by Virginia law.
However, the FDD does not define what constitutes "reasonable cause" under Virginia law, nor does it provide specific examples of grounds for default or termination that might be considered unenforceable. It only states that if a ground for default or termination does not constitute reasonable cause, it may not be enforceable. Therefore, a prospective franchisee should consult with a legal professional to understand what constitutes "reasonable cause" in Virginia and how it applies to the Best Western membership agreement.
It is important for potential franchisees to carefully review the membership agreement and understand the conditions under which Best Western can terminate the agreement. They should also be aware of their rights under the Virginia Retail Franchising Act and seek legal counsel if they have any concerns about the enforceability of the termination provisions.