If there are conflicting provisions, which state's laws supersede the Disclosure Document, Franchise Agreement, and Supplemental Agreements for Itan franchises in Indiana?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Indiana Franchise Disclosure Law, IC 23-2-2-2.5, the Franchise Agreement and Supplemental Agreements are amended as follows:
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- The laws of the State of Indiana supersede any provisions of the Disclosure Document, Franchise Agreement and Supplemental Agreements if such provisions are in conflict with Indiana law.
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- The Franchise Agreement and Supplemental Agreements are amended to provide that such agreements will be construed in accordance with the laws of the State of Indiana.
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- Any provision in the Franchise Agreement which designates jurisdiction or venue, or requires the franchisee to agree to jurisdiction or venue, in a forum outside of Indiana, is deleted from any Franchise Agreement and Supplemental Agreement issued in the State of Indiana.
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- The prohibition by Indiana Code § 23-2-2.7-1(7) against unilateral termination of the franchise without good cause or in bad faith, good cause being defined therein as material breach of the Franchise Agreement or Supplemental Agreement (as applicable), shall supersede the provisions of the Franchise Agreement or Supplemental Agreement (as applicable) in the State of Indiana to the extent they may be inconsistent with such prohibition.
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- The covenant not to compete that applies after the expiration or termination of the Franchise Agreement is hereby modified to the extent necessary to comply with Indiana Code 23-2-2.7-1(9).
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- Liquidated damages and termination penalties are prohibited by law in the State of Indiana and, therefore, the Disclosure Document, the Franchise Agreement and Supplemental Agreements are amended by the deletion of all references to liquidated damages and termination penalties and the addition of the following language to the original language that appears therein:
Notwithstanding any such termination, and in addition to the obligations of the franchisee as otherwise provided, or in the event of termination or cancellation of the Franchise Agreement under any of the other provisions therein, the franchisee nevertheless shall be, continue and remain liable to franchisor for any and all damages which franchisor has sustained or may sustain by reason of such default or defaults and the breach of the Franchise Agreement on the part of the franchisee for the unexpired Term of the Franchise Agreement.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, for franchises operating in Indiana, the laws of Indiana will take precedence over any conflicting provisions within the Disclosure Document, the Franchise Agreement, and any Supplemental Agreements. This means that if any part of the franchise agreement or related documents clashes with Indiana state law, Indiana law will govern. This is to ensure compliance with the Indiana Franchise Disclosure Law, IC 23-2-2-2.5.
This provision is significant for prospective Itan franchisees in Indiana because it provides a level of protection and assurance that their franchise operations will be governed by the laws of their state. Itan franchisees can be confident that the franchise agreement will be interpreted and enforced in accordance with Indiana law, regardless of what the standard franchise documents might otherwise state. This also applies to how the agreements are construed, ensuring they align with Indiana's legal standards.
Furthermore, any clause within the Franchise Agreement that designates jurisdiction or venue outside of Indiana is voided for Indiana franchisees. The Indiana Franchise Disclosure Law also modifies the covenant not to compete after the agreement ends to comply with Indiana Code 23-2-2.7-1(9). Additionally, the prohibition against unilateral termination without good cause, as defined in Indiana Code, supersedes any conflicting provisions in the Franchise Agreement within Indiana. These modifications collectively aim to protect the interests and rights of Itan franchisees operating within the state of Indiana.
Finally, the Itan FDD states that Indiana law prohibits liquidated damages and termination penalties. Therefore, all references to these are deleted from the Disclosure Document, the Franchise Agreement, and Supplemental Agreements for franchisees in Indiana. However, even with such termination, the franchisee remains liable for damages sustained by Itan due to defaults or breaches of the Franchise Agreement for the unexpired term.