Are any promises or representations outside of the Exit Realty Upper Midwest Disclosure Document and Franchise Agreement enforceable?
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].
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, specifically Item 17, only the terms within the Franchise Agreement are considered binding, subject to state law. Any promises, assurances, or representations made outside of the official Disclosure Document and the Franchise Agreement may not be enforceable. This is a standard integration or merger clause common in franchise agreements, designed to prevent disputes based on verbal agreements or understandings not written into the contract.
This clause means that prospective Exit franchisees should ensure all material terms and conditions are explicitly included in the Franchise Agreement. If a franchisee relies on promises or representations made by Exit representatives that are not documented in the agreement, they may have no legal recourse if those promises are not fulfilled. It is crucial to get everything in writing to protect their investment and business interests.
Furthermore, the FDD indicates that several states have statutes that may supersede the agreements in the relationship with Exit, particularly concerning termination and renewal of the franchise, dispute venue, and governing law. These states include Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, Rhode Island, Tennessee, Virginia, Washington, and Wisconsin. Franchisees in these states should be aware that state laws may provide additional protections or impose different requirements than those outlined in the Franchise Agreement. Additionally, the provision of the Franchise Agreement that provides for termination upon bankruptcy may not be enforceable under Federal Bankruptcy Law.
Therefore, prospective Exit franchisees should carefully review the Franchise Agreement and Disclosure Document with legal counsel, paying close attention to the integration clause and any state-specific modifications. Understanding which terms are binding and which state laws may apply is essential for making an informed investment decision and mitigating potential risks.