For Black Bear Diner franchises in Wisconsin, to what extent is each provision of the Addendum effective?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement and the rights of the parties will not take effect unless and until this Agreement is accepted and signed by Franchisor. Except to the extent this Agreement or any particular dispute is governed by the U.S. Trademark Act of 1946 or other federal law, this Agreement shall be governed by and construed in accordance with the laws of the State of California (without reference to its conflict of laws principles), excluding any law regulating the sale of franchises or governing the relationship between a franchisor and franchisee (developer), unless the jurisdictional requirements of such laws are met independently without reference to this Section; provided, however, that if the covenants in Section 10 of this Agreement would not be enforceable under the laws of California, and the Development Area is located outside of California, then such covenants shall be interpreted and construed under the laws of the state in which the Development Area is located.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the effectiveness of the addendum provisions for Black Bear Diner franchises in Wisconsin depends on the specific clause in question. Section 13.1, Choice of Law, stipulates that the agreement is generally governed by California law, excluding its conflict of laws principles and franchise-specific regulations, unless those regulations' jurisdictional requirements are met independently. However, an exception exists: if the non-compete covenants in Section 10 would not be enforceable under California law and the Development Area is outside California, then the laws of the state where the Development Area is located (in this case, Wisconsin) will govern those specific covenants. This means that while most aspects of the franchise agreement are subject to California law, the enforceability of non-compete clauses for a Wisconsin Black Bear Diner franchise would be determined by Wisconsin law.
This choice of law provision has significant implications for a prospective Black Bear Diner franchisee in Wisconsin. It means that understanding both California and Wisconsin law is crucial, particularly regarding non-compete agreements. Franchisees need to be aware that while the franchise agreement is written and interpreted primarily under California law, their rights and obligations concerning post-termination competition are defined by Wisconsin law. This dual-jurisdictional aspect requires careful legal review to fully grasp the scope and limitations of the franchise agreement.
For instance, if Wisconsin law has stricter standards for enforcing non-compete agreements than California, a Black Bear Diner franchisee in Wisconsin might find the non-compete clauses less restrictive than they would be under California law. Conversely, if Wisconsin law is more lenient, the non-compete clauses could be more stringently enforced. Therefore, a clear understanding of Wisconsin's specific regulations on non-compete agreements is essential for any potential Black Bear Diner franchisee in the state.
In summary, while the Black Bear Diner franchise agreement is generally governed by California law, the enforceability of non-compete clauses in Wisconsin is subject to Wisconsin law. Prospective franchisees should seek legal counsel in Wisconsin to fully understand the implications of this provision and how it affects their rights and obligations under the franchise agreement, particularly concerning competition after the franchise term.