If a provision in the Ledgers Franchise Agreement conflicts with Indiana Code 23-2-2.7-1, which prevails?
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:
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- 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.
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- 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.
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- 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).
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- Indiana Code section 23-2-2.7-1(10) prohibits the choice of an exclusive forum other than Indiana.
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- 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
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, Indiana Code sections 23-2-2.5 and 23-2-2.7 supersede the choice of law clauses within the Ledgers Franchise Agreement. This means that if any part of the agreement clashes with these specific sections of Indiana law, the Indiana law will take precedence for franchises operating within Indiana. This ensures that Ledgers franchisees in Indiana are protected by the rights and regulations established under Indiana law.
Specifically, Indiana Code 23-2-2.7-1 addresses several key aspects of the franchise relationship. It makes it illegal for Ledgers to terminate a franchise without proper cause or to refuse renewal in bad faith. It also provides other protections and rights to the franchisee. Furthermore, any non-competition clauses in the Franchise Agreement that apply after termination or non-renewal must adhere to the geographic limitations defined in the franchise territory, as dictated by Indiana Code 23-2-2.7-1(9).
Additionally, Indiana Code section 23-2-2.7-1(10) prohibits Ledgers from designating an exclusive legal forum outside of Indiana for resolving disputes. It also prevents the limitation of litigation, which the Indiana Secretary of State interprets as a prohibition on liquidated damages provisions in contracts. Therefore, any clauses in the Ledgers Franchise Agreement concerning liquidated damages may not be enforceable in Indiana.