Can a Ledgers franchisee terminate the franchise agreement under state law?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
eliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
EXHIBIT A
STATE ADDENDA TO THE DISCLOSURE DOCUMENT AND FRANCHISE AGREEMENT
The following modifications are to Loyalty Business Services LLC d/b/a Ledgers Franchise Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain portions of the Franchise Agreement dated The provisions of this State Law Addendum to Franchise Disclosure Document and Franchise Agreement ("State Addendum") apply only to those persons residing or operating a Ledgers Franchised Business in the following states: Michigan, California, Illinois, Indiana, Maryland, Minnesota, New York, Rhode Island, Virginia, or Wisconsin.
CALIFORNIA
As to franchises governed by the California Franchise Investment Law, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination, transfer or non-renewal of a franchise. If the Franchise Agreement or Agreement contains provisions that are inconsistent with the law, the law will control.
The Franchise Agreement provide for termination upon bankruptcy. This provision may not be enforceable under Federal Bankruptcy Law (11 U.S.C.A. Sec. 101 et seq.).
The Franchise Agreement contain covenants not to compete which extend beyond the termination of the agreements. These provisions may not be enforceable under California law.
Section 31125 of the California Corporation Code requires the franchisor to provide you with a disclosure document before asking you to agree to a material modification of an existing franchise.
Neither the franchisor, any person or franchise broker in Item 2 of the Disclosure Document is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 79a et seq., suspending or expelling such persons from membership in such association or exchange.
Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
The Franchise Agreement require application of the laws of Virginia. This provision may not be enforceable under California law.
You must sign a general release if you renew or transfer your franchise. California Corporation Code 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code 31000 through 31516). Business and Professions Code 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code 20000 through 20043).
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, the ability of a franchisee to terminate the franchise agreement is subject to state laws, which may provide additional rights and protections. For franchisees in California, the California Business and Professions Code Sections 20000 through 20043 grant specific rights concerning termination, transfer, or non-renewal of a franchise. If any terms in the Ledgers Franchise Agreement are inconsistent with California law, the state law will take precedence. Similarly, for franchisees in Wisconsin, the Wisconsin Franchise Investment Law (Wis. 553.01 et seq.) and Wis. Adm. Code Chapter DFI-Sec. 31.01 et seq. may supersede the Franchise Agreement, particularly in areas of termination and renewal. The FDD also notes that court decisions in Wisconsin could also supersede the Franchise Agreement in these areas.
For New York franchisees, the FDD states that all rights and causes of action arising from Article 33 of the General Business Law of the State of New York remain in force. Specifically, the language in the "Summary" section of Item 17(d), titled "Termination by franchisee", is replaced with: "You may terminate the agreement on any grounds available by law." This suggests that New York franchisees have the right to terminate the agreement based on any legal grounds available in the state.
In Indiana, Indiana Code section 23-2.2.7-1(10) prohibits the limitation of litigation, and the Indiana Secretary of State has interpreted this section to prohibit provisions in contract regarding liquidated damages. Additionally, Indiana Code section 23-2-2.5 and 23-2-2.7 supersedes the choice of law clauses of the Franchise Agreement. These stipulations indicate that Indiana law can override specific terms of the Ledgers Franchise Agreement.
These state-specific addenda highlight the importance of franchisees understanding the specific laws in their state that may affect their rights and obligations under the Ledgers Franchise Agreement. It also means that certain provisions of the franchise agreement may not be uniformly enforced across all states, as state laws can modify or supersede the terms of the agreement.