What Ohio law is the Black Bear Diner Area Development Agreement amended to recognize?
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 Black Bear Diner Franchise Disclosure Document, the Area Development Agreement includes a clause regarding choice of law. The agreement is generally governed by California law, but there is a specific exception. If Section 10 of the agreement, which likely contains covenants related to post-term competition, would not be enforceable under California law, and the Development Area is located outside of California, then the laws of the state where the Development Area is located will govern the interpretation and construction of those specific covenants.
For a prospective Black Bear Diner area developer in Ohio, this means that the enforceability of any non-compete clauses or similar restrictions after the agreement ends would be determined by Ohio law, not California law. This is only applicable if California law would deem those restrictions unenforceable.
This clause is important because the enforceability of non-compete agreements varies significantly from state to state. Ohio may have different standards than California regarding the reasonableness of the scope, duration, and geographic area of such restrictions. Therefore, a developer in Ohio should understand Ohio's specific laws regarding non-compete agreements and how they might affect their obligations after the Area Development Agreement expires or is terminated.