What is Extreme Art Studio's stance on enforcing all provisions of the Franchise Agreement in Indiana?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
Notwithstanding anything to the contrary in this provision, you do not waive any right under the Indiana Statutes with regard to prior representations made by us.
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 Extreme Art Studio's 2024 Franchise Disclosure Document, while the company aims to enforce all provisions of its Franchise Agreement, several specific modifications and superseding clauses apply to franchises offered and sold in Indiana. These modifications are included as a condition of registration in Indiana. Extreme Art Studio states that it, along with the franchisee, believes that each provision of the Franchise Agreement is fully enforceable.
Specifically, Indiana law supersedes any conflicting provisions in the FDD, the Franchise Agreement, or the Franchisor's Choice of Law State law. The Indiana code prohibiting unilateral termination without good cause will override termination clauses in the Franchise Agreement if inconsistencies arise. Any provision requiring a prospective release or waiver that relieves a person from liability under the Indiana Deceptive Franchise Practices Law is considered void.
Furthermore, the covenant not to compete is modified to comply with Indiana Code, and any contractual provision limiting litigation for breach of the agreement is void if it violates the Indiana Deceptive Franchise Practices Law. Franchisees do not waive rights under Indiana Statutes regarding prior representations made by Extreme Art Studio. These stipulations ensure that franchisees operating in Indiana are protected by Indiana's franchise laws, even if the standard Franchise Agreement contains conflicting terms.
Despite these protections for franchisees in Indiana, Extreme Art Studio maintains its intent to fully enforce all provisions of the Franchise Agreement and related documents to the fullest extent possible under applicable law, including relying on federal pre-emption under the Federal Arbitration Act.