What is the effect of bad faith on the termination of a Cr3 American Exteriors franchise in Indiana?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Item 17, "Renewal, Termination, Transfer and Dispute Resolution," is supplemented, by the addition of the following:
- A. Indiana Code 23-2-2.7-1(7) makes unlawful unilateral termination of a franchise unless there is a material violation of the Franchise Agreement and termination is not in bad faith.
- B. Indiana Code 23-2-2.7-1(5) prohibits a prospective general release of claims subject to the Indiana Deceptive Franchise Practices Law.
- C. ITEM 17(r) is amended subject to Indiana Code 23-2-2.7-1(9) to provide that the post-term non-competition covenant shall have a geographical limitation of the territory granted to Franchisee.
- D. ITEM 17(v) is amended to provide that Franchisees will be permitted to commence litigation in Indiana for any cause of action under Indiana Law.
- E. ITEM 17(w) is amended to provide that in the event of a conflict of law, Indiana Law governs any cause of action that arises under the Indiana Disclosure Law or the Indiana Deceptive Franchise Practices Act.
Source: Item 23 — RECEIPTS (FDD pages 53–150)
What This Means (2025 FDD)
According to the 2025 Cr3 American Exteriors FDD, Indiana law affects the termination of a franchise agreement. Specifically, Indiana Code 23-2-2.7-1(7) states that a Cr3 American Exteriors franchise cannot be unilaterally terminated unless there is a material violation of the Franchise Agreement, and the termination is not done in bad faith. This means that Cr3 American Exteriors must have a legitimate, significant reason to terminate the agreement, and their actions must be fair and honest.
This provision protects franchisees in Indiana from arbitrary or malicious termination by Cr3 American Exteriors. If a termination is deemed to be in bad faith, the franchisee may have grounds to challenge the termination in court and potentially seek damages. This adds a layer of legal protection for franchisees operating in Indiana.
Furthermore, the FDD notes that Indiana Code 23-2-2.7-1(5) prohibits a prospective general release of claims subject to the Indiana Deceptive Franchise Practices Law. This prevents Cr3 American Exteriors from requiring franchisees to waive their rights to sue under this law in advance. Additionally, Item 17(r) of the franchise agreement is amended, subject to Indiana Code 23-2-2.7-1(9), to limit the post-term non-competition covenant to the territory granted to the franchisee, ensuring that the restriction is geographically reasonable.
Finally, the FDD indicates that franchisees are permitted to commence litigation in Indiana for any cause of action under Indiana Law, and in the event of a conflict of law, Indiana Law governs any cause of action that arises under the Indiana Disclosure Law or the Indiana Deceptive Franchise Practices Act. These stipulations collectively reinforce the legal rights and protections afforded to Cr3 American Exteriors franchisees operating within the state of Indiana.