What is the impact of Indiana law on the venue provisions in the Extreme Art Studio Franchise Agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
The "Summary" column in Item 17.v. of the FDD is deleted and the following is inserted in its place:
Litigation regarding Franchise Agreement in Indiana; other litigation in Minnesota. This language has been included in this Franchise Disclosure Document as a condition to registration. The Franchisor and the Franchisee do not agree with the above language and believe that each of the provisions of the Franchise Agreement, including all venue provisions, is fully enforceable. The Franchisor and the Franchisee intend to fully enforce all of the provisions of the Franchise Agreement and all other documents signed by them, including but not limited to, all venue, choice of law, arbitration provisions and other dispute avoidance and resolution provisions and to rely on federal pre-emption under the Federal Arbitration Act.
The "Summary" column in Item 17.w. of the FDD is deleted and the following is inserted in its place:
Indiana law applies to disputes covered by Indiana franchise laws; otherwise Franchisor's Choice of Law State law applies.
Despite anything to the contrary in the Franchise Agreement, the following provisions will supersede and apply to all Franchises offered and sold in the State of Indiana:
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- The laws of the State of Indiana supersede any provisions of the FDD, the Franchise Agreement, or Franchisor's Choice of Law State law, if such provisions are in conflict with Indiana law.
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- The prohibition by Indiana Code 23-2-2.7-1(7) against unilateral termination of the Franchise without good cause or in bad faith, good cause being defined under law as including any material breach of the Franchise Agreement, will supersede the provisions of the Franchise Agreement relating to termination for cause, to the extent those provisions may be inconsistent with such prohibition.
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- Any provision in the Franchise Agreement that would require you to prospectively assent to a release, assignment, novation, waiver or estoppel which purports to relieve any person from liability imposed by the Indiana Deceptive Franchise Practices Law is void to the extent that such provision violates such law.
Source: Item 23 — RECEIPTS (FDD pages 49–214)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, Indiana law has specific implications for venue and other provisions within the franchise agreement. While Extreme Art Studio states its intent to enforce all venue provisions and rely on federal pre-emption under the Federal Arbitration Act, the FDD includes specific modifications for franchises offered and sold in Indiana.
Specifically, Indiana law applies to disputes covered by Indiana franchise laws; otherwise, the franchisor's choice of law applies. This means that if a dispute arises that falls under Indiana's franchise laws, those laws will take precedence. Furthermore, any provision in the Franchise Agreement that requires a franchisee to prospectively assent to a release, assignment, novation, waiver, or estoppel that relieves any person from liability imposed by the Indiana Deceptive Franchise Practices Law is void to the extent that it violates such law. This protects franchisees from unknowingly waiving their rights under Indiana law.
In summary, while Extreme Art Studio aims to enforce its standard franchise agreement terms, Indiana franchisees receive additional protections under state law, particularly concerning dispute resolution, choice of law, and waivers of liability. Prospective franchisees in Indiana should carefully review these modifications and understand their rights under Indiana law.