Are there any exceptions to the governing law provision in the Fitstop franchise agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
BE CONDUCTED ON AN INDIVIDUAL, NOT A CLASS-WIDE BASIS, AND THAT ANY PROCEEDING BETWEEN (A) YOU OR YOUR FRANCHISE OWNERS, AND (B) US OR ANY OF OUR AFFILIATES/OFFICERS/PERSONNEL, MAY NOT BE CONSOLIDATED WITH ANY OTHER PROCEEDING BETWEEN US AND ANY OTHER THIRD PARTY.
- 19.12 Governing Law. The Parties understand, acknowledge and agree that this Agreement, as well as all claims arising out of or related to the parties' respective obligations and rights hereunder, shall be interpreted and governed by the laws of the State of California without regards to that state's conflicts of law principles, except for any interpretation or analysis with respect to the enforceability of your postterm covenants against competition set forth in Sections 18.2 and 18.3 of this Agreement which the Parties agree and acknowledge shall be governed by the laws of the state where the Franchised Business is located.
Section 20: Construction of Franchise Agreement
- 20.1 The submission of this Agreement does not constitute an offer to license. This Agreement shall not be binding on us unless and until it has been fully executed by all of your principals and it has been counter-executed by an officer of us.
- 20.2 This Agreement constitutes the entire agreement between the Parties and supersedes all prior and contemporaneous, oral or written, agreements or understandings of the parties.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the franchise agreement is generally governed by California law. However, there is an exception regarding the enforceability of post-term covenants against competition, which will be governed by the laws of the state where the franchised business is located. This means that while most aspects of the agreement are subject to California law, any disputes about your ability to compete with Fitstop after the franchise agreement ends will be decided under the laws of your specific state.
This exception is significant for prospective Fitstop franchisees because the enforceability of non-compete clauses varies considerably from state to state. Some states are very strict in enforcing these covenants, while others may view them as overly restrictive and refuse to enforce them. Therefore, it is crucial to understand the laws in your state regarding non-compete agreements and how they might affect your ability to operate a similar business after your Fitstop franchise agreement expires or is terminated.
It is also important to note that Item 17 includes additional information regarding governing law, specifically referencing New York law. To the extent required by applicable law, all rights you enjoy and any causes of action arising in your favor from the provisions of Article 33 of the General Business Law of the State of New York and the regulations issued thereunder shall remain in force; it being the intent of this proviso that the non-waiver provisions of General Business Law Sections 687.4 and 687.5 be satisfied. The New York Franchises Law requires that New York law govern any cause of action which arises under the New York Franchises Law. The New York General Business Law, Article 33, Sections 680 through 695 may supersede any provision of the Franchise Agreement that is inconsistent with that law. This would only apply to franchisees operating in New York.