What state's laws govern the Budget franchise agreement, and are there any exceptions?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §§ 1051 et seq.), this Agreement and the
relationship between the parties hereto will be governed by and construed in accordance with the internal laws of the State of New Jersey, except that such state's choice of law and conflicts of laws rules will not apply and the New Jersey Franchise Practices Act or any successor statute and/or regulation will not apply unless its jurisdictional requirements are met independently without reference to this paragraph."
- The following caveat is added to Section 12.6:
"Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota."
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- Notwithstanding anything to the contrary set forth in the Franchise Agreement, and in particular Article 14 thereof, the Franchise Agreement and the legal relations among the parties to the Franchise Agreement shall be governed by and construed in accordance with the laws of the State of North Dakota.
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- The following caveat is added to Article 14 of the Franchise Agreement:
"The Securities Commissioner has held the following to be unfair, unjust or inequitable to North Dakota franchisees (Section 51-19-09, N.D.C.C.):
Restriction on Forum: Requiring North Dakota franchisees to consent to the jurisdiction of courts outside of North Dakota.
Applicable Laws: Franchise Agreements which specify that they are to be governed by the laws of a state other than North Dakota.
With respect to franchises governed by Minnesota law, Budget will comply with Minn. Stat. Sec. 80C.14, Subds. 3, 4 and 5 which require, except in certain specified cases, that you be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the Budget License Agreement.
- The "Summary" sections of Item 17(v), entitled Choice of forum, and 17(w), entitled Choice of law, in the Budget License Agreement chart of Item 17 are amended by adding the following:
"However, the governing choice of law and choice of forum shall not be considered a waiver of any right conferred upon you by the provisions of Article 33 of the General Business Law of the State of New York."
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the franchise agreement and the relationship between Budget and its franchisees are generally governed by the internal laws of the State of New Jersey. However, this is with the exception of the state's choice of law and conflicts of laws rules, which will not apply. Additionally, the New Jersey Franchise Practices Act or any successor statute and/or regulation will not apply unless its jurisdictional requirements are met independently without reference to this paragraph. There are also exceptions for claims arising under the Maryland Franchise Registration and Disclosure Law.
For franchisees in North Dakota, the Franchise Agreement and the legal relations among the parties are governed by and construed in accordance with the laws of the State of North Dakota, notwithstanding anything to the contrary in the Franchise Agreement. The Securities Commissioner in North Dakota considers it unfair, unjust, or inequitable to require North Dakota franchisees to consent to the jurisdiction of courts outside of North Dakota or to specify that the agreements are governed by the laws of a state other than North Dakota.
Furthermore, the governing choice of law and choice of forum shall not be considered a waiver of any right conferred upon franchisees by the provisions of Article 33 of the General Business Law of the State of New York. For franchises governed by Minnesota law, Budget will comply with specific Minnesota statutes regarding termination and non-renewal notices, as well as prohibitions on requiring litigation to be conducted outside Minnesota and waiving rights to a jury trial or other legal protections.