Does state law affect the Floyds 99 franchisor's right to terminate the 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 FRANCHISE DISCLOSURE DOCUMENT FOR THE STATE OF MINNESOTA
Minnesota law provides a Franchisee with certain termination and nonrenewal rights. Minn. Stat. Sec. 80C.14 Subd. 3, 4 and 5 require, except in certain specified cases, that a Franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for nonrenewal of the applicable agreement.
ADDENDUM TO THE FLOYD'S 99 FRANCHISING, LLC DISCLOSURE DOCUMENT FOR THE STATE OF RHODE ISLAND
- The following paragraph is added at the end of Item 17:
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."
ADDENDUM TO THE FLOYD'S 99 FRANCHISING, LLC DISCLOSURE DOCUMENT FOR THE STATE OF VIRGINIA
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- 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 ground 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.
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- 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.
You must sign a general release if you renew or transfer your franchise. California Corporations Code §31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code §§31000 through 31516). Business and Professions
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, state laws can indeed affect the franchisor's right to terminate the franchise agreement. Specifically, the FDD includes addenda and riders for several states that modify the standard franchise agreement to comply with local franchise laws. These modifications address franchisee termination and non-renewal rights. For example, Minnesota law requires Floyds 99 to provide a franchisee with 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal, except in certain specified cases. Similarly, Virginia law makes it unlawful for a franchisor to cancel a franchise without reasonable cause, potentially overriding termination clauses in the standard agreement. Rhode Island does not allow the franchisor to enforce jurisdiction or venue outside of the state.
These state-specific provisions are crucial for prospective Floyds 99 franchisees because they can significantly alter the conditions under which their franchise can be terminated or not renewed. In states like Minnesota, franchisees gain extended notice and cure periods, offering them more time to address any issues that could lead to termination. In Virginia, the "reasonable cause" standard adds a layer of protection against arbitrary termination.
Moreover, several states, including California, Minnesota, and Virginia, include provisions that prevent franchisees from waiving rights or disclaiming reliance on franchisor statements, further safeguarding franchisees against potentially overreaching terms in the standard agreement. These state law modifications reflect a broader trend in franchise law to protect franchisees from unfair practices and ensure a more balanced relationship between franchisors and franchisees.
Therefore, prospective Floyds 99 franchisees must carefully review the addendum and rider specific to their state to understand how local laws modify the standard franchise agreement, particularly regarding termination and non-renewal rights. Understanding these state-specific protections is essential for making an informed investment decision and mitigating potential risks associated with the franchise agreement.