In Virginia, what happens if a default or termination ground stated in the Chesters franchise agreement does not constitute 'reasonable cause' under the Virginia Retail Franchising Act?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Additional Disclosure. The following statements are added to Item 17.h.
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the Franchise Disclosure Document for CHESTER'S INTERNATIONAL, LLC, an Alabama limited liability company, for use in the Commonwealth of Virginia shall be amended as follows:
Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the franchise agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to the 2025 FDD, Chesters franchise agreements in Virginia are subject to the Virginia Retail Franchising Act, which states that it is unlawful for a franchisor to cancel a franchise without reasonable cause.
If any of the grounds for default or termination outlined in the Chesters franchise agreement do not meet the definition of "reasonable cause" as defined by the Virginia Retail Franchising Act or other Virginia laws, then that specific provision within the franchise agreement may not be legally enforceable.
This means that Chesters cannot terminate a franchise agreement in Virginia based on reasons that are deemed unreasonable under Virginia law. This provision protects franchisees from potentially unfair or arbitrary terminations by ensuring that there is a legitimate and justifiable reason for ending the franchise agreement. Prospective franchisees in Virginia should carefully review the termination clauses in the franchise agreement and understand their rights under the Virginia Retail Franchising Act.