Where will arbitration occur if required by the Floors To Go franchise agreement?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
provision and hereby agree that service of process may be made upon any of them in any proceeding relating to or arising out of this Agreement by any means allowed by applicable state or federal law. The parties further agree that venue for any proceeding relating to or arising out of this Agreement shall be in the courts of appropriate jurisdiction in the state in which the underlying demand for arbitration was filed (and to the appropriate appellate courts within that state); provided, however, with respect to any action for injunctive or other extraordinary relief, any party may bring such action in any state or federal district court which has jurisdiction. The Commissioner has held that requiring franchisees to consent to the jurisdiction of courts outside of North Dakota is unfair, unjust or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. Nothing in this Agreement can abrogate or reduce any of Franchisee's rights as provided for by the North Dakota Franchise Investment Law (N.D. Cent. Code, §§ 51- 19-01 through 51-19-17), or Franchisee's rights to any procedure, forum, or remedies provided for by the laws of North Dakota.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, the venue for any proceeding relating to or arising out of the Franchise Agreement, including arbitration, will be in the courts of appropriate jurisdiction in the state where the underlying demand for arbitration was filed. This means that if a Floors To Go franchisee initiates arbitration, the legal proceedings will take place within that state's court system. However, an exception exists for actions seeking injunctive or other extraordinary relief, which can be brought in any state or federal district court with jurisdiction.
This clause is fairly standard in franchise agreements, as it aims to provide a predictable and localized legal forum. It generally benefits franchisees by allowing them to pursue legal action in their own state, potentially reducing travel and legal costs. However, the exception for injunctive relief could allow Floors To Go to pursue urgent legal actions against a franchisee in a location more favorable to the company.
It's important to note that the North Dakota Amendment included in the FDD states that nothing in the agreement can reduce a franchisee's rights as provided by North Dakota law, including rights to any procedure, forum, or remedies provided by North Dakota law. Similarly, the Rhode Island Amendment states that any provision restricting jurisdiction or venue to a forum outside of Rhode Island is void with respect to a claim otherwise enforceable under the Rhode Island Franchise Investment Act. These amendments suggest that franchisees in North Dakota and Rhode Island may have additional protections regarding the location of legal proceedings.
Prospective Floors To Go franchisees should carefully consider this arbitration clause and any state-specific amendments, as the location of legal proceedings can significantly impact the cost and convenience of resolving disputes. It would be prudent to consult with a legal professional to fully understand their rights and obligations under the franchise agreement, particularly in light of potential conflicts with state franchise laws.