Under Indiana law, as it pertains to the Exit franchise agreement, is the subfranchisor automatically entitled to injunctive relief as stated in Section 21?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement is governed by the laws of the State of Indiana, then: (1) the geographical limitation contained in Section 21 will be limited to within the Protected Territory; (2) Section 21 which states Subfranchisor is entitled to injunctive relief may be inapplicable; rather, Subfranchisor is entitled to seek injunctive relief; (3) notwithstanding any provisions of this Agreement to the contrary, a court of competent jurisdiction will determine (a) whether damages alone can adequately compensate Subfranchisor if there is a violation by Franchisee, Franchisee's shareholders or the partners or members, as the case may be, and (b) whether Subfranchisor will be required to post a bond or other security, and the amount of such bond or other security, in any injunctive proceeding commenced by Subfranchisor against Franchisee, Franchisee's shareholders or the partners or members, as the case may be.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Section 21 of the franchise agreement, which addresses injunctive relief, is interpreted differently in Indiana. The FDD states that the clause granting the subfranchisor automatic entitlement to injunctive relief may not be applicable under Indiana law. Instead, the subfranchisor is only entitled to seek injunctive relief, meaning they must still demonstrate the need for it to a court.
Specifically, an Indiana court will determine whether monetary damages alone would adequately compensate the Exit subfranchisor if the franchisee, its shareholders, partners, or members violate the agreement. The court will also decide whether the subfranchisor must post a bond or other security as part of the injunctive proceeding. This differs from some other states where the franchise agreement might automatically grant injunctive relief without these additional considerations.
For a prospective Exit franchisee in Indiana, this means that the subfranchisor's ability to obtain an injunction against them is not guaranteed. The subfranchisor must convince a court that an injunction is necessary and that monetary damages are insufficient. Additionally, the franchisee may be protected by a requirement that the subfranchisor post a bond, which could provide financial recourse to the franchisee if the injunction is later deemed unwarranted. This contrasts with the terms outlined in Section 21 of the standard Exit franchise agreement, which may be interpreted differently in other states.