Does the Itan franchise agreement's governing law provision include conflicts of law principles?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
24. GENERAL PROVISIONS
- 24.1. Governing Law. Except as governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §§ 1051, et seq.), this Agreement and the franchise relationship are governed by the Laws of California without reference to its principles of conflicts of law, but any California Law that regulates the offer and sale of franchises or business opportunities or governs the relationship of a franchisor and its franchisee will not apply unless its jurisdictional requirements are met independently without reference to this Section.
If your Salon is located outside of California, the public policies of the state in which your Salon is located govern the enforceability of noncompetition covenants notwithstanding the California choice of law provision set forth above.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the franchise agreement and relationship are generally governed by California law, except as governed by the United States Trademark Act of 1946. However, this is specified to be without reference to California's principles of conflicts of law. This means that while California law is the default, the agreement avoids applying California's specific rules about which law applies when there's a conflict between different states' laws.
For a prospective Itan franchisee, this means that the agreement aims for a straightforward application of California law, unless federal trademark law applies. However, the exclusion of California's conflict of law principles could lead to uncertainty if there are legal disputes involving parties or events connected to other states. In such cases, it might not be immediately clear which state's laws would ultimately govern specific aspects of the dispute.
It's also important to note that if the Itan salon is located outside of California, the public policies of the state where the salon is located will govern the enforceability of noncompetition covenants, regardless of the California choice of law provision. This is a significant exception, as noncompetition agreements are often heavily scrutinized and regulated at the state level. Franchisees should be aware of the specific laws in their state regarding noncompetition agreements, as those laws could override the general California choice of law provision in the franchise agreement.