What Virginia law is referenced regarding restrictions on franchisors for Ledgers franchises?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
As to franchises governed by the Virginia Retail Franchising Act, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
- In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the Franchise Disclosure Document is amended as follows:
Additional Disclosure: The following statements are added to Item 17.h.
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any ground for default or termination stated in the franchise agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the Virginia Retail Franchising Act is referenced concerning restrictions on franchisors. Specifically, Section 13.1-564 of this act is mentioned in relation to the unlawful cancellation of a franchise without reasonable cause. If any grounds for default or termination stated in the franchise agreement do not constitute "reasonable cause" as defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
For a prospective Ledgers franchisee in Virginia, this means that the franchisor's ability to terminate the franchise agreement is limited by the requirement of "reasonable cause" as defined under Virginia law. This provides a degree of protection to the franchisee against arbitrary or unfair termination by Ledgers. The FDD explicitly states that if any termination clauses in the franchise agreement do not meet the standard of "reasonable cause" under Virginia law, those clauses may be deemed unenforceable.
This type of disclosure is important because franchise agreements often contain various termination clauses that might, under certain circumstances, be viewed as overly broad or unfair. By referencing the Virginia Retail Franchising Act, Ledgers acknowledges the legal limitations on its ability to enforce such clauses. This ensures that franchisees are aware of their rights under Virginia law and that Ledgers will be held to a specific legal standard when considering franchise terminations.
It is advisable for a prospective Ledgers franchisee in Virginia to consult with a legal professional to fully understand their rights and obligations under both the franchise agreement and the Virginia Retail Franchising Act. This will help ensure they are aware of the specific conditions under which the franchise can be terminated and what constitutes "reasonable cause" in the eyes of Virginia law.