What condition must be met for state law regulating franchise sales to apply to the Bft 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 Franchisee 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, for a state law regulating the sale of franchises or governing the relationship between Bft and its franchisees to apply, its jurisdictional requirements must be met independently without reference to the section regarding governing law. This means that the state law's own criteria for jurisdiction must be satisfied, regardless of what the franchise agreement says about which state's laws govern the agreement.
In simpler terms, if a state has specific laws about franchising, those laws will only apply to a Bft franchise if the circumstances of the franchise (such as where it's located or where the franchisee lives) meet the state's own requirements for applying its laws. The franchise agreement's choice of law provision does not automatically trigger the application of a particular state's franchise laws.
This is important for prospective Bft franchisees because it clarifies that the governing law provision in the franchise agreement does not override state franchise laws if those laws independently apply based on jurisdictional requirements. Franchisees should be aware of the franchise laws in their state and how those laws might affect their relationship with Bft, irrespective of the governing law specified in the franchise agreement.