In Michigan, can Bombs Away require arbitration or litigation to be conducted outside of Michigan?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
(THE FOLLOWING APPLIES TO TRANSACTIONS GOVERNED BY THE MICHIGAN FRANCHISE INVESTMENT LAW ONLY)
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (a) A prohibition on the right of a franchisee to join an association of franchisees.
- (b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protection provided in this act. This shall not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Michigan law addresses specific provisions that are considered unfair if included in franchise documents. If any of these provisions are present, they are deemed void and unenforceable against the franchisee. These include prohibitions on a franchisee's right to join an association of franchisees and requirements for a franchisee to assent to releases, assignments, novations, waivers, or estoppels that deprive them of rights and protections under the Michigan Franchise Investment Law.
Additionally, provisions allowing Bombs Away to terminate a franchise before its term expires without good cause are void. Good cause is defined as the franchisee's failure to comply with lawful provisions of the franchise agreement, provided they are given written notice and a reasonable opportunity to cure the failure, which need not exceed 30 days. Similarly, Bombs Away cannot refuse to renew a franchise without fairly compensating the franchisee for the fair market value of their inventory, supplies, equipment, fixtures, and furnishings at the time of expiration.
The Michigan addendum in Bombs Away's FDD does not explicitly address whether Bombs Away can require arbitration or litigation to be conducted outside of Michigan. However, it is important to note that the Michigan Attorney General's office provides contact information for addressing any questions regarding the notice, suggesting they can provide further clarification on the enforceability of specific provisions within the franchise agreement.