What is the effect of Section 20.H (Consent to Jurisdiction) of the Red Wagon Club Agreement on the Guaranty?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
The provisions contained in Section 20 (Enforcement) of the Agreement, including Section 20.A (Mediation), Section 20.B (Arbitration), and Section 20.H (Consent to Jurisdiction) of the Agreement are incorporated into this Guaranty by reference and shall govern this Guaranty and any disputes between the Guarantors and Franchisor. The Guarantors shall reimburse Franchisor for all costs and expenses Franchisor incurs in connection with enforcing the terms of this Guaranty.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, Section 20.H (Consent to Jurisdiction) of the Franchise Agreement is incorporated by reference into the Guaranty and Assumption of Obligations agreement. This means that the terms outlined in Section 20.H also apply to the Guaranty. Specifically, Section 20.H requires that all legal actions arising from the Franchise Agreement or the relationship between the franchisee and Red Wagon Club must be initiated in the court nearest to Red Wagon Club's principal place of business, which is currently in Coconut Grove, Florida.
This clause also stipulates that the franchisee and their owners irrevocably submit to the jurisdiction of that court and waive any objections they might have regarding the jurisdiction or venue. The Guarantors, by signing the Guaranty, agree to these terms as well. This is significant because it dictates where any legal disputes related to the Guaranty must be resolved, potentially requiring guarantors to litigate in Florida regardless of their own location.
For a prospective Red Wagon Club franchisee and their guarantors, this means they are agreeing to resolve any disputes related to the franchise agreement or the guaranty in a specific jurisdiction (Coconut Grove, Florida). This could increase costs and inconvenience if they are located far from Florida. It is important for potential franchisees and guarantors to understand and consider this jurisdictional requirement before signing the Franchise Agreement and Guaranty.