For Kidokinetics franchises in Indiana, what happens if the Franchise Agreement's termination for cause provisions are inconsistent with Indiana law?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
of the FDD is deleted and the following is inserted in its place:
Indiana law applies to disputes covered by Indiana franchise laws; otherwise Franchisor's Choice of Law State law applies.
Despite anything to the contrary in the Franchise Agreement, the following provisions will supersede and apply to all Franchises offered and sold in the State of Indiana:
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- The laws of the State of Indiana supersede any provisions of the FDD, the Franchise Agreement, or Franchisor's Choice of Law State law, if such provisions are in conflict with Indiana law.
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Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Indiana law takes precedence over the Franchise Agreement if there are inconsistencies. Specifically, Indiana Code 23-2-2.7-1(7) prohibits Kidokinetics from unilaterally terminating a franchise without good cause or in bad faith. Good cause is legally defined as including any material breach of the Franchise Agreement.
This means that the provisions in the Kidokinetics Franchise Agreement relating to termination for cause are superseded by Indiana law to the extent that those provisions may be inconsistent with such prohibition. In practical terms, Kidokinetics cannot terminate an Indiana franchise without demonstrating a material breach of the agreement and without acting in good faith. This protects the franchisee from arbitrary or unfair termination.
This type of provision is common in franchise agreements to ensure compliance with state laws that are designed to protect franchisees. Prospective Kidokinetics franchisees in Indiana should carefully review the Franchise Agreement and understand their rights under Indiana law regarding termination, especially the definition of 'good cause' and the requirement of 'good faith'.