What federal law does Kidokinetics intend to rely on to enforce the arbitration provisions in its agreements?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
10428 West SR 84, an midnight of the fifth business day after the Effective Date. | | I hereby cancel this transact | Franchisee: | | Date: | By: Print Name: Print Name: Its: 1001 |
RHODE ISLAND
§ 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." The FDD, the Franchise Agreement, and the Supplemental Agreements are amended accordingly
to the extent required by law.
The above language has been included in this FDD as a condition to registration. The Franchisor and the Franchisee do not agree with the above language and believe that each of the provisions of the Franchise Agreement and the Supplemental Agreements, including all choice of law provisions, are fully enforceable.
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, Kidokinetics intends to rely on federal pre-emption under the Federal Arbitration Act to enforce the arbitration provisions in its agreements. This intention is stated in the context of Rhode Island law, which includes a provision in its Franchise Investment Act that voids any clause in a franchise agreement that restricts jurisdiction or venue to a forum outside of Rhode Island or requires the application of another state's laws, especially concerning claims enforceable under the Act. Kidokinetics states that it does not agree with the Rhode Island provision.
Kidokinetics states that it intends to fully enforce all provisions of its Franchise Agreement and supplemental agreements, including all venue, choice-of-law, and arbitration provisions. This indicates that Kidokinetics aims to ensure disputes are resolved through arbitration, potentially outside of Rhode Island, and under laws it prefers, leveraging the Federal Arbitration Act to supersede conflicting state laws.
For a prospective franchisee, this means that disputes with Kidokinetics might be subject to arbitration, which may occur in a location outside their home state and under different laws. While Rhode Island franchisees are given some protection under their state's Franchise Investment Act, Kidokinetics's stated intention to rely on the Federal Arbitration Act suggests that the company will attempt to enforce the arbitration provisions as written, potentially limiting a franchisee's ability to pursue claims within their own state under their own state's laws. Franchisees should be aware of this and seek legal counsel to understand the implications of these provisions.