Where must all disputes with Exit Realty Upper Midwest be litigated?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| l. | EXIT Realty Upper Midwest's approval of transfer by Franchisee | 18 | EXIT Realty Upper Midwest has the right to approve all transfers but will not unreasonably withhold approval. | |----|-----------------------------------------------------------------------------------|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | m. | Conditions for EXIT Realty Upper Midwest approval of transfer | 18 | New Franchisee qualifies, transfer fee (10% of the then current initial franchise fee, not to exceed 25% of the Initial Franchise fee paid) paid, purchase agreement approved, training arranged, Assignment signed and current Franchise Agreement signed by new Franchisor or Franchisee (also see the non-competition section below). | | n. | EXIT Realty Upper Midwest's right of first refusal to acquire your business | Not Applicable | | | o. | EXIT Realty Upper Midwest's option to purchase your business | Not Applicable | | | p. | Your death or disability | 16 | Treated as a non-curable breach. See Section 18.4 for transferability provisions. | | q. | Non-competition covenants during the term of the Franchise | 21 | Subject to state law, no involvement in competing business without Subfranchisor's prior written consent. | | r. | Non-competition covenants after the Franchise is terminated or expires. | 21 | Subject to state law, no competing business similar to EXIT for 1 year within the area licensed by us from EXIT. | | s. | Modification of the Agreement | 28 | Fees are subject to change by Franchisor. The Manuals are subject to change. | | t. | Integration/merger clause | 28 | Only the terms of the Agreement are binding (subject to state law). Any other promises may not be enforceable. Any representations or promises outside of this Disclosure Document and the Franchise Agreement may not be enforceable. | | u. | Dispute resolution by arbitration or mediation | 25 | Subject to state law, all disputes must be litigated in Lakeville, MN | | v. | Choice of forum | 25 | Subject to applicable state law, all disputes must be litigated Lakeville, MN | | w. | Choice of law | 25 | Subject to applicable state law, Minnesota | The following states have statutes which may supersede the Agreements in your relationship with EXIT including the areas of termination and renewal of your Franchise and venue for disputes and governing law: ARKANSAS [Ark. Code § 4-72-204], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043], CONNECTICUT [Gen. Stat. Section 42-133e et seq.], DELAWARE [Code, tit. 6, Ch.25, Sections 2551, et seq.], HAWAII [Rev. Stat. Section 482], ILLINOIS [Rev. Stat. Chapter 815 ILCS 705/1-44], INDIANA [Stat. Section 23-2-2.7], IOWA [Code Sections 523H.1 - 523H.17], MICHIGAN [Stat. Section 445.1527(c)], MINNESOTA [Stat. Section 80C.14], MISSISSIPPI [Code Section 75-24-53], MISSOURI [Stat. Section 407.405], NEBRASKA [Rev. Stat. Section 87-404], NEW JERSEY [Stat. Section 56:10-1], RHODE ISLAND [Gen. Laws § 6- 50-4], TENNESSEE [Code Ann. § 47-25-1503], VIRGINIA [Code 13.1-557-574 - 13.1-564], WASHINGTON [Code Section 19.100.180], WISCONSIN [Stat. Section 135.03]. These and other states may have court decisions which may supersede the Agreements in your relationship with EXIT including the areas of termination and renewal of your Franchise, venue for disputes and governing laws.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 27–31)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Item 17 outlines dispute resolution. Generally, all disputes with Exit Realty Upper Midwest must be litigated in Lakeville, MN, as specified in the franchise agreement. This means that if a franchisee has a disagreement with Exit that leads to legal action, the lawsuit must be filed and pursued in the courts located in Lakeville, Minnesota. This clause dictates the venue, or location, where legal proceedings will take place.
However, the FDD also notes that this is "subject to applicable state law." This means that certain state laws may override the franchise agreement's venue selection. Item 17 lists several states, including Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, Rhode Island, Tennessee, Virginia, Washington, and Wisconsin, that have statutes which may supersede the agreements in your relationship with Exit, including the venue for disputes and governing law. These states may have franchise laws that prevent Exit from enforcing the venue selection clause, potentially allowing a franchisee to litigate disputes in their home state.
Prospective Exit franchisees should be aware of the implications of the forum selection clause and consult with an attorney to understand how it may affect their rights, especially if they reside in a state with franchise-specific laws. Understanding the interplay between the franchise agreement and state laws is crucial for assessing the potential costs and inconveniences associated with dispute resolution.