In Michigan, can Crown Gold Exchange require arbitration or litigation to be conducted outside of the state?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, Michigan law includes specific protections for franchisees. If a Crown Gold Exchange franchise agreement contains a provision requiring arbitration or litigation to occur outside of Michigan, that provision is void and unenforceable against the franchisee. This protection ensures that Michigan franchisees are not forced to bear the additional costs and burdens of resolving disputes in a distant location.
However, the FDD also notes an exception to this rule. A Michigan franchisee can voluntarily agree, at the time of arbitration, to conduct the arbitration proceedings at a location outside of Michigan. This means that while Crown Gold Exchange cannot mandate out-of-state arbitration in the initial franchise agreement, the franchisee retains the option to consent to it later if they deem it beneficial or convenient.
This provision is designed to protect franchisees from potentially unfair or overreaching terms in the franchise agreement, while still allowing flexibility for both parties to agree on a mutually acceptable dispute resolution process. Prospective Crown Gold Exchange franchisees in Michigan should carefully review their franchise agreement to ensure compliance with these state-specific regulations.