How does Indiana law protect Ledgers franchisees from unfair termination practices?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
t 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:
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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.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, Indiana law provides specific protections for franchisees against unfair termination and non-renewal. Indiana Code 23-2-2.7-1 makes it illegal for Ledgers to terminate a franchise without good cause or refuse to renew a franchise in bad faith. This statute ensures that Ledgers franchisees in Indiana have legal recourse if they believe their franchise was unfairly terminated or not renewed.
Additionally, Indiana law impacts non-compete clauses within the Franchise Agreement. Any non-compete provisions that apply after the termination or non-renewal of the agreement are limited to the geographic territory granted in the Franchise Agreement and must comply with Indiana Code 23-2-2.7-1(9). This means Ledgers cannot impose overly broad non-compete restrictions that would unduly limit a former franchisee's ability to work in the same industry after leaving the Ledgers system.
Furthermore, Indiana Code 23-2-2.7-1(10) prohibits Ledgers from requiring franchisees to litigate disputes in a forum outside of Indiana. This ensures that Indiana franchisees can resolve legal issues with Ledgers in a local Indiana court, rather than being forced to travel to another state. The Indiana Secretary of State has also interpreted this section to prohibit provisions in contracts regarding liquidated damages, meaning that any liquidated damages provisions in the Franchise Agreement may not be enforceable in Indiana.