Besides the U.S. Federal Arbitration Act, what state's laws govern the Bft Franchise Agreement and Multi-Unit Agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 etseq.), or other federal law, and except as otherwise required by North Dakota law, this Agreement, the franchise, and all claims arising from the relationship between Franchisor and Developer will be governed by the laws of the State of California, without regard to its conflict of laws rules, except that any state law regulating the sale of franchises or governing the relationship of a franchisor and its franchisee will not apply unless its jurisdictional requirements are met independently without reference to this section.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the Franchise Agreement and Multi-Unit Agreement are generally governed by the laws of California, except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act), or other applicable federal laws. This means that California law will be used to interpret the agreements and resolve disputes, unless federal law takes precedence. This is specified without regard to California's conflict of laws rules. However, any state law regulating the sale of franchises or governing the relationship of a franchisor and its franchisee will not apply unless its jurisdictional requirements are met independently without reference to this section.
For prospective Bft franchisees, this governing law provision is important because it determines which state's laws will apply in most legal disputes with the franchisor. However, franchisees should be aware of the exceptions for federal law and specific state franchise laws, which could override the general rule in certain situations. Franchisees should consult with legal counsel to understand how these provisions may affect their rights and obligations under the agreements.
Notably, certain states such as Maryland, North Dakota, Illinois, and Washington have state-specific riders that may modify the governing law provisions within their respective states. For example, franchisees in Maryland may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, and Maryland law may apply to those claims. Similarly, in North Dakota, the North Dakota Franchise Investment Law may impact certain aspects of the agreement, and franchisees may bring an action in North Dakota for claims arising under that law. These state-specific riders highlight the importance of understanding the applicable laws in the franchisee's specific jurisdiction.