Does Indiana law affect the enforceability of non-compete clauses in the Ledgers Franchise Agreement?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
i) disclaiming reliance 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.
INDIANA
NOTICE TO PROSPECTIVE FRANCHISEES IN THE STATE OF INDIANA:
The following are revisions to Item 17 of the Disclosure Document:
Indiana Code section 23-27-1(9) prohibits provisions in contract which require a franchisee to agree to a covenant not to compete with the franchisor for a period longer than three (3) years or in an area greater than the exclusive area granted by the Franchise Agreement upon termination or failure to renew the Franchise Agreement. Accordingly, in the State of Indiana, upon termination of the Franchise Agreement, you cannot be involved in a competing business for one (1) year within your exclusive Franchise Territory.
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 contract regarding liquidated damages. Accordingly, the provisions in the Franchise Agreement regarding liquidated damages may not be enforceable.
Indiana Code section 23-2-2.7-1(10) prohibits the choice of an exclusive forum other than Indiana.
Indiana Code section 23-2-2.5 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:
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, Indiana law does affect the enforceability of non-compete clauses within the state. Specifically, Indiana Code section 23-27-1(9) limits the scope of non-compete agreements that Ledgers can enforce against franchisees in Indiana.
This Indiana law prohibits Ledgers from enforcing non-compete provisions that last longer than three years or cover an area larger than the franchisee's exclusive territory. As a result, upon termination of the Franchise Agreement in Indiana, a franchisee can only be restricted from engaging in a competing business for one year within their exclusive territory.
Furthermore, the FDD states that any provisions in the Ledgers Franchise Agreement relating to non-competition upon termination or non-renewal will be limited to a geographic area no greater than the territory granted in the Franchise Agreement and will be construed in accordance with Indiana Code 23-2-2.7-1(9). This means that the standard non-compete terms in the Ledgers agreement are superseded by Indiana law to protect franchisees operating within Indiana.
Therefore, prospective Ledgers franchisees in Indiana should be aware that the non-compete clauses in their agreements are subject to these limitations under Indiana law. They should consult with legal counsel to fully understand their rights and obligations regarding non-competition upon termination or non-renewal of their franchise agreement.