For Ledgers franchises in Virginia, what happens if a ground for default or termination in the franchise agreement does not constitute 'reasonable cause' under Virginia law?
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, the Virginia Retail Franchising Act addresses the scenario where a ground for default or termination in the franchise agreement does not constitute "reasonable cause" under Virginia law. Specifically, if any ground for default or termination stated in the franchise agreement does not constitute reasonable cause as defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable. This amendment is in recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act.
For a prospective Ledgers franchisee in Virginia, this means that Ledgers cannot enforce a termination clause in the franchise agreement if the reason for termination does not meet the legal standard of "reasonable cause" as defined by Virginia law. This provision protects franchisees from potentially arbitrary or unfair terminations by ensuring that terminations are based on legitimate and justifiable reasons.
This protection is particularly important because it aligns the franchise agreement with Virginia state law, preventing Ledgers from enforcing terms that contradict the state's franchising regulations. Franchisees should be aware of what constitutes "reasonable cause" under Virginia law to understand their rights and protections against termination. It is advisable for prospective franchisees to seek legal counsel to fully understand the implications of this clause and how it applies to their specific situation.