In Virginia, is it lawful for Extreme Art Studio to cancel a franchise without reasonable cause?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the FDD for Extreme Art Studio Franchising, LLC for use in the Commonwealth of Virginia shall be amended as follows:
Additional Disclosure. The following statements are added to Item 8 and Item 17.h.
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
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 FDD, it is unlawful for Extreme Art Studio to cancel a franchise in Virginia without reasonable cause. The FDD includes an addendum for use in Virginia that references Section 13.1-564 of the Virginia Retail Franchising Act, which explicitly states that a franchisor cannot cancel a franchise without reasonable cause.
This protection means that if any clause in the Franchise Agreement allows Extreme Art Studio to terminate the agreement without what Virginia law considers "reasonable cause," that clause may not be enforceable. This addendum aims to protect franchisees from potentially unfair terminations.
Furthermore, any statement, questionnaire, or acknowledgment signed by the franchisee cannot waive claims under Virginia franchise law or disclaim reliance on statements made by Extreme Art Studio. This provision is designed to prevent franchisees from inadvertently giving up their legal rights. This protection supersedes any conflicting terms in any document related to the franchise agreement.