Can Itan require arbitration or litigation to be conducted outside of the franchisee's state?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
d unenforceable in the State of North Dakota, pursuant to Section 51-19-09 of the North Dakota Franchise Law. Item 17 of the Disclosure Document and certain provisions in the Franchise Agreement and Supplemental Agreements include certain covenants restricting competition to which you must agree. The Commissioner has held that covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statue, are unfair, unjust, or inequitable within the intent of Section 51-19- 09 of the North Dakota Franchise Law. The Disclosure Document, Franchise Agreement and Supplemental Agreements are amended accordingly to the extent required by law.
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- Provisions requiring arbitration or mediation to be held at a location that is remote from the site of the franchisee's business are generally considered unenforceable in the State of North Dakota, pursuant to Section 51-19-09 of the North Dakota Franchise Investment Law. Accordingly, the parties must agree on the site where arbitration or mediation will be held.
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- Provisions requiring jurisdiction in a state other than North Dakota are generally considered unenforceable in the State of North Dakota, pursuant to Section 51-19-09 of the North Dakota Franchise Investment Law.
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- Provisions requiring that agreements be governed by the laws of a state other than North Dakota are generally considered unenforceable in the State of North Dakota, pursuant to Section 51-19-09 of the North Dakota Franchise Investment Law.
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- Provisions requiring your consent to liquidated or termination damages are generally considered unenforceable in the State of North Dakota, pursuant to Section 51-19-09 of the North Dakota Franchise Investment Law.
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Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to the 2025 Itan FDD, the ability of Itan to require arbitration or litigation outside of a franchisee's state is restricted in certain states.
For instance, in North Dakota, provisions mandating arbitration or mediation at a location distant from the franchisee's business site are typically deemed unenforceable under Section 51-19-09 of the North Dakota Franchise Investment Law. Similarly, provisions that require jurisdiction in a state other than North Dakota are generally considered unenforceable in North Dakota, pursuant to the same section of the North Dakota Franchise Investment Law.
In Illinois, any provision in the Franchise Agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void, in accordance with Section 4 of the Illinois Franchise Disclosure Act. However, the Franchise Agreement may provide for arbitration to take place outside of Illinois. In Minnesota, Itan is prohibited from requiring litigation to be conducted outside Minnesota, according to Minnesota Statute Section 80C.21 and Minnesota Rule 2860.4400(J).
In California, prospective franchisees are encouraged to consult with legal counsel to determine the applicability of California and federal laws to any provisions of a Franchise Agreement or Supplemental Agreement restricting venue to a forum outside the State of California.