Can Crown Gold Exchange require arbitration or litigation to be conducted outside of the franchisee's state?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
n with the franchise.
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW will prevail.
RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.
In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to the 2024 Crown Gold Exchange Franchise Disclosure Document, the franchisor's ability to mandate arbitration or litigation outside of a franchisee's home state is subject to certain state laws. For instance, in Illinois, any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void, although the agreement may still provide for arbitration outside of Illinois. Similarly, North Dakota deems it unfair and inequitable for franchise agreements to require franchisees to arbitrate disputes at a location remote from the franchisee's business or to consent to the jurisdiction of courts outside of North Dakota.
In Washington, the FDD states that for any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
For prospective franchisees, these stipulations mean that the enforceability of clauses requiring out-of-state arbitration or litigation can vary significantly depending on the state where the franchise is located. Franchisees should be aware of their state's specific franchise laws and how they might impact dispute resolution processes. It is advisable to seek legal counsel to understand the full implications of these clauses and to ensure compliance with local regulations, especially when the franchise agreement specifies Idaho law as the governing law, as this may not be enforceable in all states like California.