What is the effect of Section 13.1-564 of the Virginia Retail Franchising Act on the enforceability of termination provisions in the Ledgers franchise agreement?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
As to franchises governed by the Virginia Retail Franchising Act, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
- In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the Franchise Disclosure Document is amended as follows:
Additional Disclosure: The following statements are added to Item 17.h.
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any ground for default or termination stated in the franchise agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, Section 13.1-564 of the Virginia Retail Franchising Act places restrictions on the franchisor's ability to cancel a franchise. Specifically, it is unlawful for Ledgers to cancel a franchise without "reasonable cause." This means that any grounds for default or termination stated in the franchise agreement that do not meet the definition of "reasonable cause" under Virginia law may not be enforceable.
For a prospective Ledgers franchisee in Virginia, this addendum provides an additional layer of protection against potentially unfair termination by the franchisor. It ensures that Ledgers must have a legitimate and justifiable reason, as defined by Virginia law, to terminate the franchise agreement. This could be particularly important in situations where the franchisee believes the termination is unwarranted or based on minor infractions of the agreement.
This provision serves to protect franchisees, ensuring that franchisors cannot terminate agreements without proper justification. Franchisees in Virginia should be aware of this protection and consult with legal counsel to understand their rights under the Virginia Retail Franchising Act, especially concerning what constitutes "reasonable cause" for termination. This knowledge can help them operate their Ledgers franchise with greater security and confidence.