In the event of a legal dispute related to the Franchise Agreement or the relationship between parties, in which courts must any cause of action, claim, suit or demand be brought for an Exit franchise?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Any cause of action, claim, suit or demand allegedly arising from or related to this Agreement or the relationship of the parties must be brought in the state or federal court located in the county or district encompassing the Subfranchisor's offices or headquarters. Both parties irrevocably submit themselves to, and consent to, the exclusive jurisdiction of these courts. The provisions of this section shall survive termination of this Agreement. Franchisee is aware of the business purposes and needs underlying the language of this section, and with a complete understanding of this section, agrees to be bound by it.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, any legal action related to the Franchise Agreement or the relationship between the franchisee and subfranchisor must be initiated in the state or federal court located in the county or district encompassing the subfranchisor's offices or headquarters. This requirement applies to all causes of action, claims, suits, or demands. Both parties, according to the FDD, irrevocably submit to the exclusive jurisdiction of these courts, and this agreement remains in effect even after the termination of the Franchise Agreement. The franchisee acknowledges the rationale behind this clause and agrees to be bound by it.
This clause means that an Exit franchisee may be required to litigate disputes in a location that is not convenient for them, potentially increasing legal costs and logistical challenges. It is a standard practice in franchising for the venue of disputes to be specified in the franchise agreement, often favoring the franchisor's location.
Prospective Exit franchisees should consider the implications of this venue selection clause, especially if the subfranchisor's headquarters are located far from their own business or residence. They may want to consult with an attorney to fully understand their rights and obligations under the Franchise Agreement, including the implications of litigating disputes in a specific jurisdiction.