Does the Ledgers Franchise Agreement allow for liquidated damages in Indiana?

According to Ledgers's 2025 Franchise Disclosure Document, the enforceability of liquidated damages provisions within the Franchise Agreement is restricted in Indiana. Specifically, Indiana Code section 23-2.2.7-1(10) is interpreted by the Indiana Secretary of State to prohibit contract provisions regarding liquidated damages. Consequently, any clauses in the Ledgers Franchise Agreement pertaining to liquidated damages may not be enforceable within the state of Indiana.

This means that if Ledgers attempts to enforce a liquidated damages clause against a franchisee in Indiana, a court might deem that clause unenforceable. Liquidated damages typically specify a predetermined sum of money that must be paid if a party breaches the contract. The inability to enforce such clauses could affect Ledgers's ability to recoup anticipated losses in the event of a franchisee's breach.

For a prospective Ledgers franchisee in Indiana, this provides a degree of protection against potentially steep financial penalties resulting from contract breaches. However, it is important to note that this does not exempt the franchisee from all liability; rather, it means that Ledgers may need to pursue actual damages through litigation, which can be a more complex and uncertain process. Franchisees should consult with legal counsel to fully understand their rights and obligations under Indiana law and the Franchise Agreement.

It is also important for prospective franchisees to understand that other aspects of the Franchise Agreement remain in effect. For example, Indiana Code also addresses non-compete clauses and choice of law, which are also modified to comply with Indiana law. Therefore, franchisees should carefully review the entire Item 22 and consult with legal counsel to understand the full scope of the modifications and their implications.