Is the Virginia law application provision in the Ledgers Franchise Agreement always enforceable in California?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement require application of the laws of Virginia. This provision may not be enforceable under California law.
You must sign a general release if you renew or transfer your franchise. California Corporation Code 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code 31000 through 31516). Business and Professions Code 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code 20000 through 20043).
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE DISCLOSURE DOCUMENT.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, the enforceability of the Virginia law application provision within the Franchise Agreement is not absolute in California. While the Ledgers Franchise Agreement generally requires the application of Virginia law, this provision may not be enforceable under California law. This is due to California's specific franchise laws designed to protect franchisees.
Specifically, California's state addendum notes that if any terms in the disclosure document are inconsistent with California law, the California law will take precedence. This ensures that franchisees operating in California are afforded the protections granted by California's franchise-specific statutes. These protections cover aspects like termination, transfer, and non-renewal of the franchise agreement, as outlined in the California Business and Professions Code Sections 20000 through 20043.
Furthermore, the FDD highlights that certain provisions within the Ledgers Franchise Agreement, such as those related to covenants not to compete extending beyond the termination of the agreement, may not be enforceable in California. Similarly, any requirement for a franchisee to waive rights under the Franchise Investment Law or Franchise Relations Act is void under California law. Therefore, prospective Ledgers franchisees in California should be aware that the Virginia law application provision may be superseded by California law to protect their rights.