What is the potential issue with the Franchise Agreement and Development Agent Agreement requiring application of Florida laws for Checkersrallys franchises in California?

According to Checkersrallys's 2025 Franchise Disclosure Document, there may be enforceability issues when the Franchise Agreement and Development Agent Agreement require the application of Florida law for franchises operating in California. Specifically, California law may not recognize or enforce certain provisions if they conflict with California's franchise-specific regulations. This means that while the agreement stipulates Florida law, a California court might prioritize California law, potentially altering the rights and obligations of both Checkersrallys and the franchisee.

This discrepancy could lead to disputes over which state's laws govern the franchise relationship, especially concerning termination, non-renewal, and enforcement of covenants. For instance, if a specific clause in the Checkersrallys agreement is valid under Florida law but violates California's Franchise Relations Act or Franchise Investment Law, a California franchisee may find that the clause is unenforceable. This creates uncertainty and potential legal challenges for franchisees operating in California.

To protect their interests, prospective Checkersrallys franchisees in California should seek legal counsel to understand the specific areas where Florida and California law may conflict. They should also be aware that California law voids any waiver of rights under the Franchise Investment Law or the Franchise Relations Act, meaning that franchisees cannot contractually agree to give up protections afforded to them under California law. This ensures that franchisees retain their legal rights and remedies, regardless of what the franchise agreement stipulates about governing law.