If a Carls franchisee files a suit against CKR, in which jurisdiction must the suit be filed?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.5 Jurisdiction. The parties agree that, to the extent any disputes cannot be resolved directly between them, Franchisee shall file any suit against CKR only in the federal or state court having jurisdiction where CKR's principal offices are located at the time suit is filed.
CKR may file suit in the federal or state court located in the jurisdiction where CKR's principal offices are located at the time suit is filed, in the jurisdiction where Franchisee resides or does business, where any Franchised Restaurant is or was located, where the claim arose or where Franchisor has its principal offices at the time suit is filed.
Franchisee consents to the personal jurisdiction of those courts over Franchisee and venue in those courts.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 FDD, a Carls franchisee must file any lawsuit against CKR in the federal or state court that has jurisdiction where CKR's principal offices are located at the time the suit is filed. This means that if a dispute arises that cannot be resolved directly, the franchisee is obligated to bring legal action in the specific jurisdiction where CKR's main offices are situated when the lawsuit is initiated.
CKR, however, has more options regarding where it can file a suit against a franchisee. CKR may file suit in the federal or state court located in the jurisdiction where its principal offices are located at the time suit is filed, in the jurisdiction where the franchisee resides or does business, where any franchised restaurant is or was located, where the claim arose, or where CKR has its principal offices at the time suit is filed. The franchisee also consents to the personal jurisdiction of those courts and to venue in those courts.
This clause regarding jurisdiction and venue is important for prospective Carls franchisees to understand. It means franchisees may have to bear the expense and inconvenience of traveling to the location of CKR's principal offices to pursue any legal claims against the company. This could create a disadvantage for franchisees, especially if CKR's principal offices are located far from the franchisee's place of business or residence. Franchisees in Minnesota should also note the addendum stating that Minnesota Statute § 80C.21 and Minnesota Rule 2860.4400J prohibit CJR from requiring litigation to be conducted outside Minnesota.
It is typical in franchising for the franchisor to specify the jurisdiction and venue for legal disputes in the franchise agreement. This allows the franchisor to manage legal risks and ensure consistency in legal proceedings. However, franchisees should carefully consider the implications of such clauses and seek legal advice to understand their rights and obligations.