What does the Rhode Island provision supersede regarding the Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
§ 19-28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act." The FDD, the Franchise Agreement, and the Supplemental Agreements are amended accordingly to the extent required by law.
The above language has been included in this FDD 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 and the Supplemental Agreements, including all choice of law provisions, are fully enforceable. The Franchisor and the Franchisee intend to fully enforce all of the provisions of the Franchise Agreement, the Supplemental Agreements, 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.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — RECEIPTS (FDD pages 49–214)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the Rhode Island Franchise Investment Act states that any provision in a franchise agreement that restricts jurisdiction or venue to a forum outside of Rhode Island, or requires the application of laws from another state, is void if it contradicts the Act. This means that Rhode Island law will take precedence over any conflicting terms in the Extreme Art Studio franchise agreement.
Specifically, this provision is included in the FDD as a condition of registration in Rhode Island. However, Extreme Art Studio states that it does not agree with this language and believes that all provisions of the Franchise Agreement and Supplemental Agreements, including choice of law provisions, are fully enforceable. Extreme Art Studio intends to enforce all provisions, including venue, choice of law, arbitration, and other dispute resolution measures, relying on federal pre-emption under the Federal Arbitration Act.
Furthermore, the FDD states that no statement, questionnaire, or acknowledgment signed by a franchisee related to the franchise relationship can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Extreme Art Studio or its representatives. This specific provision supersedes any other term in any document executed in connection with the franchise in Rhode Island. This ensures that franchisees in Rhode Island retain their rights under state law and are not bound by clauses that might otherwise limit their legal recourse.