Are Principal(s) of the Fly Fitness franchisee required to submit to the jurisdiction of Nebraska courts?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 20.3.
Governing Law and Venue.
This Agreement is made in and shall be substantially performed in the State of Nebraska.
Any claims, controversies, disputes, or actions arising out of this Agreement shall be governed, enforced, and interpreted pursuant to the laws of the State of Nebraska.
Franchisee and its Principal(s), except where specifically prohibited by law, hereby irrevocably submit themselves to the sole and exclusive jurisdiction of the state and federal courts in Nebraska.
Franchisee and its Principal(s), hereby waive all questions of personal jurisdiction for the purpose of carrying out this provision.
- 20.4.
Mutual benefit.
Franchisee, Principal(s), and Franchisor acknowledge that the parties' agreement regarding applicable state law and forum set forth in Section 20.3 provide each of the parties with the mutual benefit of uniform interpretation of this Agreement and any dispute arising hereunder.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the Franchise Agreement specifies that franchisees and their principals must submit to the jurisdiction of Nebraska courts. Specifically, any claims, controversies, disputes, or actions arising from the Franchise Agreement will be governed, enforced, and interpreted under Nebraska law. Franchisees and their principals are required to irrevocably submit to the sole and exclusive jurisdiction of the state and federal courts in Nebraska, except where specifically prohibited by law. They also waive all questions of personal jurisdiction to carry out this provision.
This means that if a dispute arises between a Fly Fitness franchisee and the franchisor, any legal proceedings will likely take place in Nebraska, regardless of where the franchisee's business is located. This could involve significant travel and legal expenses for a franchisee who does not reside in Nebraska. It also means that Nebraska law will be applied to the interpretation and enforcement of the Franchise Agreement.
The FDD states that this agreement regarding applicable state law and forum provides each party with the mutual benefit of uniform interpretation of the agreement and any dispute arising under it. However, the primary benefit likely accrues to Fly Fitness, as it centralizes legal proceedings in its home state.
Prospective franchisees should carefully consider this clause and consult with legal counsel to understand the implications of litigating disputes in Nebraska. They should also be aware of the potential costs and inconveniences associated with this requirement.