Besides the Federal Arbitration Act, what state's laws govern the Body20 franchise agreement?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). Except to the extent governed by the Federal Arbitration Act or other federal law, this Agreement will be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles, except that any state law (a) regulating the sale of franchises, licenses, or business opportunities, (b) governing the relationship of a franchisor and its franchisee, or (c) involving
unfair or deceptive acts or practices will not apply unless its jurisdictional requirements are met independently without reference to this Section.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, the franchise agreement is generally governed by Delaware law, except for matters relating to arbitration, which are governed by the Federal Arbitration Act. However, this is subject to exceptions. For franchisees in Illinois, Illinois law governs the agreement, except to the extent governed by the Federal Arbitration Act or other federal law. For franchisees in Maryland and Rhode Island, the laws of those states will apply to claims arising under their respective state's franchise laws, to the extent required by applicable law.
This means that depending on the franchisee's location, certain state laws may override the general governing law of Delaware, particularly concerning franchise-specific regulations and consumer protection. This is a fairly common practice in franchising, as many states have laws in place to protect franchisees from potential abuses by franchisors. These state laws often address issues such as disclosure requirements, termination rights, and dispute resolution processes.
For a prospective Body20 franchisee, it is crucial to understand which state's laws will govern their franchise agreement, as this can significantly impact their rights and obligations. Franchisees should carefully review the state-specific riders and addenda to the franchise agreement, paying close attention to any provisions that modify the governing law or dispute resolution procedures. It would be prudent to consult with an attorney experienced in franchise law to fully understand the implications of these provisions and how they may affect their investment.