Which Indiana code section restricts or prohibits liquidated damages provisions for Burros Fries franchises?

According to Burros Fries's 2024 Franchise Disclosure Document, Indiana Code (IC) 23.2-2.5-2 restricts or prohibits the imposition of liquidated damages provisions in franchise agreements. This means that if a Burros Fries franchise agreement includes a clause that requires the franchisee to pay a predetermined amount of damages in the event of a breach, that clause may not be enforceable under Indiana law.

Liquidated damages clauses are intended to provide a predictable remedy for breach of contract, avoiding the need for complex calculations of actual damages. However, many states, including Indiana, regulate or prohibit them to protect franchisees from potentially unfair or excessive penalties. These regulations recognize the power imbalance that can exist between a franchisor and franchisee.

For a prospective Burros Fries franchisee in Indiana, this information is crucial. It suggests that the franchisee may have some protection against overly burdensome damage clauses in the franchise agreement. However, it is important to consult with a legal professional to fully understand the implications of Indiana law and how it applies to the specific terms of the Burros Fries franchise agreement. Franchisees should carefully review the franchise agreement with their attorney to identify any liquidated damages provisions and assess their enforceability under Indiana law.