What state's law applies to disputes between Buildingstars and the franchisee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- H.
Governing Law and Jurisdiction.
FRANCHISEE acknowledges that this Agreement was accepted in the State of Missouri.
Except to the extent that this Agreement or any particular dispute is governed by the U.S.
Trademark Act of 1946 (Lanham Act, 115 U.S.C. 1051), this Agreement will be governed, to the extent permissible, by the laws of the State of Missouri (without reference to its conflict of laws principles).
If, however, any provision of this Agreement would not be enforceable under the laws of Missouri, and if the Business is located outside of Missouri and the provision would be enforceable under the laws of the state in which the Business is located, then the provision in question (and only that provision) will be interpreted and construed under the laws of the state where the Business is located.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the franchise agreement is generally governed by the laws of Missouri, as the agreement was accepted in Missouri. This means that Missouri law will be used to interpret and enforce the agreement in most situations. However, there is an exception: if any part of the agreement is unenforceable under Missouri law, and the Buildingstars business is located outside of Missouri, the law of the state where the business is located will govern that specific provision, but only if that state's law would make the provision enforceable.
This clause is important for prospective Buildingstars franchisees because it clarifies which state's laws will dictate the terms of their franchise agreement and any potential disputes. Franchisees operating outside of Missouri may find that certain provisions are governed by their local state laws if those laws would uphold the provision, offering a degree of protection or different interpretation than if Missouri law applied strictly. This could impact the enforceability of non-compete clauses, termination rights, or other critical aspects of the franchise relationship.
It is fairly common in franchising for the franchisor to specify a particular state's law to govern the franchise agreement, often the state where the franchisor's headquarters are located. This helps ensure consistency and predictability for the franchisor. However, the exception included in the Buildingstars agreement, which allows for the franchisee's local state law to govern specific provisions under certain conditions, is a notable deviation from this standard practice and could be seen as a benefit to franchisees operating outside of Missouri.