What happens if there is a conflict of law regarding the Floyds 99 agreement?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.4 State and Federal Law. THE PARTIES ACKNOWLEDGE THAT IN THE EVENT THAT THE TERMS OF THIS AGREEMENT REGARDING TERMINATION OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE STATE OR FEDERAL LAW, SUCH LAW SHALL GOVERN DEVELOPER'S RIGHTS REGARDING TERMINATION OR EXPIRATION OF THIS AGREEMENT.
ADDENDUM TO THE FLOYD'S 99 FRANCHISING, LLC DISCLOSURE DOCUMENT FOR THE STATE OF NORTH DAKOTA
To the extent the North Dakota Franchise Investment Law, N.D. Cent. Code, §§51-19-01 – 51-19- 17 applies, the terms of this Addendum apply.
Item 17, Additional Disclosures. The following statements are added to Item 17:
Any provision requiring franchisees to consent to the jurisdiction of courts outside North Dakota or to consent to the application of laws of a state other than North Dakota may be unenforceable under North Dakota law. Any mediation or arbitration will be held at a site agreeable to all parties. If the laws of a state other than North Dakota govern, to the extent that such law conflicts with North Dakota law, North Dakota law will control.
Minnesota Statutes, Section 80C.21 and Minnesota Rule 2860.4400(J) prohibit the franchisor from requiring litigation to be conducted outside Minnesota, requiring wavier of a jury trial, or requiring the franchisee to consent to liquidated damages, termination penalties or judgment notes. In addition, nothing in the Franchise Disclosure Document or agreement(s) can abrogate or reduce any of franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
Section 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."
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 FDD, the franchise agreement acknowledges that state and federal laws may sometimes conflict with the terms of the agreement, particularly regarding termination or expiration. In such cases, the applicable state or federal law will take precedence and govern the franchisee's rights concerning termination or expiration of the agreement. This ensures that franchisees are protected by the laws of their jurisdiction, even if the franchise agreement attempts to impose different terms.
For franchisees in specific states like North Dakota, the addendum to the Floyds 99 Franchise Disclosure Document clarifies further that certain provisions in the franchise agreement may not be enforceable if they conflict with North Dakota law. These include provisions related to jurisdiction, choice of law, covenants not to compete, waivers of exemplary and punitive damages, payment of costs and expenses, waivers of trial by jury, and consent to termination or liquidated damages. In these instances, North Dakota law will control, providing additional protection to the franchisee.
Similarly, in Minnesota, the FDD states that Minnesota Statutes prohibit Floyds 99 from requiring litigation to be conducted outside of Minnesota, requiring a waiver of a jury trial, or requiring the franchisee to consent to liquidated damages, termination penalties, or judgment notes. The Minnesota FDD also states that nothing in the Franchise Disclosure Document or agreements can reduce any of franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction. Rhode Island also voids any provision in a franchise agreement restricting jurisdiction or venue to a forum outside of Rhode Island or requiring the application of the laws of another state with respect to a claim otherwise enforceable under the Rhode Island Franchise Investment Act.