In Michigan, can Endless Summer Sweets require arbitration or litigation to be conducted outside of Michigan?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
of the franchisee. This provision may not be enforceable under federal bankruptcy law.
(THE FOLLOWING APPLIES TO TRANSACTIONS GOVERNED BY THE MICHIGAN FRANCHISE INVESTMENT LAW ONLY)
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:
- (a) A prohibition on the right of a franchisee to join an association of franchisees.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, if a 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 is explicitly stated within the document for franchisees operating in Michigan.
This means that Endless Summer Sweets cannot force a Michigan-based franchisee to resolve disputes in another state. This provision ensures that franchisees are not unduly burdened by having to travel to a different state for legal proceedings, which could significantly increase their costs and logistical challenges.
However, the FDD also notes an exception: a franchisee can agree to conduct arbitration outside of Michigan at the time the arbitration takes place. This suggests that while Endless Summer Sweets cannot mandate out-of-state arbitration in the initial agreement, the franchisee has the option to agree to it later if they find it beneficial or convenient. This provides some flexibility while still protecting the franchisee's initial rights.