Under what state's law is the Spray Net franchise agreement governed?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
wing is a revision to Item 5 of the Disclosure Document:
Due to our financial condition, the Illinois Attorney General's Office requires that the payment of initial fees be deferred until franchisor has satisfied its pre-opening obligations to franchisee and the franchise is open for business.
No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
SPRAY-NET INC. ILLINOIS ADDENDUM TO THE FRANCHISE AGREEMENT
The following are revisions to the Franchise Agreement:
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- Definitions. Capitalized terms used but not defined in this Rider have the meanings given in the Agreement. The "Illinois Act" means the Illinois Franchise Disclosure Act of 1987.
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- Governing Law and Jurisdiction. Notwithstanding any provision of this Agreement to the contrary, this Agreement is governed by Illinois law.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the franchise agreement is generally governed by the law of the state specified in the agreement. However, there are addenda for specific states that may modify this general rule. For instance, the Illinois Addendum states that the agreement is governed by Illinois law, regardless of any conflicting provision in the standard agreement. Similarly, the New York Addendum indicates that the choice of law should not waive any rights conferred by the General Business Law of New York. These addenda highlight that while the franchise agreement may initially specify a particular state's law, state-specific franchise laws can take precedence. Prospective franchisees should carefully review any state-specific addenda to understand how the governing law may be modified in their particular state.
For franchisees in Illinois, the Illinois Addendum explicitly states that the franchise agreement is governed by Illinois law, overriding any conflicting provisions in the standard agreement. This means that Illinois franchisees will have their franchise agreements interpreted and enforced under Illinois state law, providing them with the protections and rights afforded by Illinois franchise laws. This is a significant benefit for franchisees in Illinois, as it ensures that their franchise relationship is subject to the legal framework of their state.
In New York, the New York Addendum clarifies that the choice of law in the franchise agreement should not be considered a waiver of any rights conferred to the franchisee or franchisor by the General Business Law of New York, Article 33. This ensures that New York franchisees retain all the protections and rights provided by New York franchise law, regardless of what the general choice of law provision in the franchise agreement states. This addendum is crucial for New York franchisees as it prevents the franchisor from using the choice of law provision to circumvent New York's franchise regulations.
In summary, while the Spray Net franchise agreement likely contains a general provision specifying the governing law, franchisees must pay close attention to any state-specific addenda. These addenda can modify the governing law provision, ensuring that franchisees receive the full protections and rights available under their state's franchise laws. It is essential for prospective franchisees to carefully review both the franchise agreement and any applicable state addenda to fully understand their legal rights and obligations.