Are liquidated damages provisions enforceable in Ledgers franchise agreements executed in Indiana?

According to Ledgers' 2025 Franchise Disclosure Document, liquidated damages provisions in franchise agreements executed in Indiana may not be enforceable. The FDD states that Indiana Code section 23-2.2.7-1(10) prohibits the limitation of litigation, and the Indiana Secretary of State has interpreted this to mean that liquidated damages provisions are not enforceable. This applies to all Ledgers Franchise Agreements executed in and operative within the State of Indiana.

For a prospective Ledgers franchisee in Indiana, this means that the standard franchise agreement's clauses about liquidated damages might not hold up in court. Liquidated damages typically specify an exact amount of money one party must pay to the other in the event of a breach of contract. If these provisions are unenforceable, Ledgers would have to prove actual damages in court, which can be more difficult than simply enforcing a pre-agreed amount.

This could be seen as a benefit to the franchisee, as it may limit the financial penalties they face if they breach the agreement. However, it also introduces uncertainty, as the actual damages could potentially be higher or lower than what was initially stipulated in the liquidated damages clause. Prospective franchisees should seek legal counsel to fully understand the implications of this unenforceability and how it might affect their specific circumstances.