Is the application of Florida law in the Checkersrallys Franchise Agreement and Development Agreement always enforceable under California law?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement and Development Agent Agreement require application of the laws of the State of Florida.
This provision might not be enforceable under California law.
Section 31125 of the California Corporations Code requires us to give you a disclosure document, in a form containing the information that the Commissioner may by rule or order require, before a solicitation of a proposed material modification of an existing franchise.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the Franchise Agreement and Development Agent Agreement require the application of Florida law. However, this provision might not be enforceable under California law. This means that while the agreements are written to be governed by Florida law, a California court might not uphold that provision in its entirety.
Several factors could lead a California court to disregard the Florida law provision. California has specific franchise laws designed to protect franchisees, and these laws may conflict with Florida law. If a provision in the Checkersrallys Franchise Agreement would violate California's franchise laws, a California court is likely to apply California law instead. Additionally, California Corporations Code § 31512 voids any waiver of rights under the Franchise Investment Law (California Corporations Code §§ 31000 through 31516), and Business and Professions Code § 20010 voids any waiver of rights under the Franchise Relations Act (Business and Professions Code §§ 20000 through 20043).
Prospective Checkersrallys franchisees in California should be aware that certain aspects of the franchise agreement might be subject to California law despite the stated preference for Florida law. This could affect issues such as termination, non-renewal, and dispute resolution. It is important for franchisees to consult with legal counsel to understand their rights and obligations under both California and federal law, especially regarding provisions like those requiring arbitration in Florida. Franchisees should also be aware that California law prohibits Checkersrallys from disclaiming or denying representations made to the franchisee or their ability to rely on those representations.
In practical terms, this means that if a Checkersrallys franchisee in California has a dispute with the franchisor, the franchisee may have the right to have the dispute resolved under California law, even if the franchise agreement states that Florida law applies. This could be a significant advantage for the franchisee, as California law may offer greater protections than Florida law. Franchisees should seek legal advice to determine the applicability of California and federal laws to any provisions of a franchise agreement restricting venue to a forum outside the State of California.