If the Exit agreement is governed by South Dakota law, what happens to any provision that designates jurisdiction or venue outside of South Dakota?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
- (G) SOUTH DAKOTA. If this Agreement is governed by the laws of the State of South Dakota, then: (1) Section 16 of this Agreement will be amended to require that, in the event Subfranchisor provides Franchisee with written notice that Franchisee has breached this Agreement, Franchisee will have thirty (30) days after receipt of such written notice within which to correct the breach; (2) the covenant not to compete upon termination or expiration of this Agreement contained in Section 21 may be unenforceable, except in certain circumstances provided by law; (3) any provision of this Agreement which designates jurisdiction or venue outside of the State of South Dakota is void with respect to any cause of action which is otherwise enforceable in the State of South Dakota; and (4) pursuant to SDCL § 37-5B, any acknowledgment provision, disclaimer or integration clause or other provision having a similar effect in this Agreement will not negate or act to remove from judicial review any statement, misrepresentation or action that violates Chapter 37-5B or a rule or order under Chapter 37-5B.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if the franchise agreement is governed by South Dakota law, any provision that designates jurisdiction or venue outside of South Dakota is void with respect to any cause of action that is otherwise enforceable in the State of South Dakota. This means that if a dispute arises that is governed by South Dakota law and is enforceable in South Dakota courts, the franchisee cannot be forced to litigate the matter in a court outside of South Dakota, even if the franchise agreement specifies a different location.
This provision protects Exit franchisees in South Dakota by ensuring that they can resolve disputes in their home state, which can be more convenient and cost-effective than traveling to another jurisdiction. It also ensures that South Dakota law will be applied to the dispute, which may be more favorable to the franchisee than the laws of another state.
It is important for prospective Exit franchisees in South Dakota to understand this provision and its implications. They should also consult with an attorney to discuss their rights and obligations under the franchise agreement.