Does the jurisdiction and venue clause pertaining to legal disputes for an Exit franchise survive the termination of the Franchise Agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
25.3. Jurisdiction; Venue
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, the jurisdiction and venue clause pertaining to legal disputes does indeed survive the termination of the Franchise Agreement. Specifically, any legal action related to the agreement or the relationship between the parties must be initiated in the state or federal court located in the county or district where Exit's offices or headquarters are located. Both Exit and the franchisee consent to the exclusive jurisdiction of these courts, and this agreement remains in effect even after the franchise agreement is terminated.
This means that even after the franchise agreement ends, whether through expiration or termination, the franchisee is still bound by the specified jurisdiction and venue for any legal disputes arising from the franchise relationship. This could be significant for a franchisee who, after termination, moves their business or residence far from Exit's headquarters, as they would still be required to litigate any disputes in the location where Exit's headquarters are based.
However, the FDD also notes some exceptions. For instance, if the Franchise Agreement is governed by Illinois or South Dakota law, any provision designating jurisdiction or venue outside of those respective states is void with respect to any cause of action enforceable in those states. Therefore, prospective franchisees should carefully consider the implications of the jurisdiction and venue clause, especially in light of potential state-specific exceptions, and seek legal counsel to fully understand their rights and obligations.