For Ledgers franchises in Indiana, what laws govern the franchise agreement?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Indiana Code section 23-2-2.5 and 23-2-2.7 supersedes the choice of law clauses of the Franchise Agreement.
ALL FRANCHISE AGREEMENTS EXECUTED IN AND OPERATIVE WITHIN THE STATE OF INDIANA ARE HEREBY AMENDED AS FOLLOWS:
-
- Any agreement executed in and operative within the State of Indiana shall be governed by applicable Indiana franchise laws and the right of any Franchisee to institute a civil action or initiate arbitral proceedings within the State of Indiana shall not be deemed to have been abridged in any form or manner by any provisions contained in this Agreement.
-
- The Indiana Code 23-2-2.7-1 makes it unlawful for a Franchisor to terminate a franchise without good cause or to refuse to renew a franchise on bad faith, as well as providing other protections and rights to the franchisee.
-
- In compliance with Indiana Code 12-2-2.7-1(9), any provisions in this Franchise Agreement relating to non-competition upon the termination or non-renewal of the Franchise Agreement shall be limited to a geographic area not greater than the Territory granted in this Franchise Agreement and shall be construed in accordance with Indiana Code 23-2-2.7-1(9).
-
- Indiana Code section 23-2-2.7-1(10) prohibits the choice of an exclusive forum other than Indiana.
-
- Indiana Code section 23-2-2.7-1(10) prohibits the limitation of litigation. The Indiana Secretary of State has interpreted this section to prohibit provisions in contracts regarding
- liquidated damages. Accordingly, any provisions in the Franchise Agreement regarding liquidated damages may not be enforceable.
-
- In compliance with Indiana Code 23-2-2.7-1(10), any inference contained in the Franchise Agreement to the effect that the Franchisor "is entitled" to injunctive relief shall, when applicable to a Franchise Agreement executed in and operative within the State of Indiana, is hereby deleted, understood to mean and replace the words "may seek."
-
- Indiana Code section 23-2-2.5 and 23-2-2.7 supersedes the choice of law clauses of the Franchise Agreement.
-
- In compliance with Indiana Code 23-2-2.7-1(5), any requirement that the Franchisee must execute a release upon termination of this Agreement shall not be mandatory and is hereby made discretionary. However, Franchisee shall execute all other documents necessary to fully rescind all agreements between the parties under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, Indiana franchise laws govern franchise agreements executed and operative within the State of Indiana. Specifically, Indiana Code sections 23-2-2.5 and 23-2-2.7 supersede any choice of law clauses in the standard Ledgers Franchise Agreement. This means that regardless of what the franchise agreement might say about which state's laws apply, Indiana law will take precedence for franchises operating in Indiana.
Several provisions are amended to comply with Indiana law. Ledgers cannot terminate a franchise without good cause or refuse renewal in bad faith, and non-compete clauses are limited to the franchisee's granted territory and must align with Indiana Code 23-2-2.7-1(9). The agreement also specifies that Indiana Code section 23-2-2.7-1(10) prohibits requiring franchisees to litigate disputes in a forum outside of Indiana.
Furthermore, Indiana law, as interpreted by the Secretary of State, prohibits the inclusion of liquidated damages provisions in the Franchise Agreement. While Ledgers may seek injunctive relief, any inference that they are automatically entitled to it is removed, and the agreement is amended to state that Ledgers "may seek" such relief. Additionally, franchisees are not obligated to execute a release upon termination of the agreement, although they must still execute other documents necessary to rescind all agreements between the parties.