What is the effect of the Indiana Acts on provisions in the Endless Summer Sweets franchise agreement?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
- **2.
Certain Provisions Modified.** Any provision of the Agreement which would have any of the following effects is hereby modified to the extent required for the Agreement to be in compliance with the Indiana Acts:
- (1) Requiring goods, supplies, inventories, or services to be purchased exclusively from the franchisor or sources designated by the franchisor where such goods, supplies, inventories, or services of comparable quality are available from sources other than those designated by the franchisor.
However, the publication by the franchisor of a list of approved suppliers of goods, supplies, inventories, or services or the requirement that such goods, supplies, inventories, or services comply with specifications and standards prescribed by the franchisor does not constitute designation of a source nor does a reasonable right of the franchisor to disapprove a supplier constitute a designation.
This subdivision does not apply to the principal goods, supplies, inventories, or services manufactured or trademarked by the franchisor.
(2) Allowing the franchisor to establish a franchisor-owned outlet engaged in a substantially identical business to that of the franchisee within the exclusive territory granted the franchisee by the franchise agreement; or, if no exclusive territory is designated, permitting the franchisor to compete unfairly with the franchisee within a reasonable area.
(3) Allowing substantial modification of the franchise agreement by the franchisor without the consent in writing of the franchisee.
(4) Allowing the franchisor to obtain money, goods, services, or any other benefit from any other person with whom the franchisee does business, on account of, or in relation to, the transaction between the franchisee and the other person, other than for compensation for services rendered by the franchisor, unless the benefit is promptly accounted for, and transmitted to the franchisee.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to the 2024 Endless Summer Sweets Franchise Disclosure Document, the Indiana Acts, specifically the Indiana Franchise Act and the Indiana Deceptive Franchise Practices Act, modify certain provisions of the franchise agreement to ensure compliance with Indiana law.
Specifically, any part of the Endless Summer Sweets franchise agreement that requires franchisees to exclusively purchase goods, supplies, inventories, or services from the franchisor or its designated sources is modified. This modification applies if goods, supplies, inventories, or services of comparable quality are available from other sources. However, Endless Summer Sweets can publish a list of approved suppliers or require that goods meet certain specifications without this being considered exclusive designation. This exception does not apply to goods, supplies, inventories, or services that Endless Summer Sweets manufactures or trademarks.
The Indiana Acts also affect provisions that would allow Endless Summer Sweets to establish a company-owned outlet engaged in a substantially identical business within the franchisee's exclusive territory or unfairly compete with the franchisee in a reasonable area if no exclusive territory exists. Additionally, the Acts prevent Endless Summer Sweets from substantially modifying the franchise agreement without the franchisee's written consent and prohibit the franchisor from receiving undisclosed benefits from the franchisee's transactions with other parties, unless such benefits are accounted for and transmitted to the franchisee.