Blog Banner Image

The Franchise Memorandum

Court Strikes Franchise Agreement’s Choice of Law Provision
Posted in Choice of Law

A federal court in the Southern District of Illinois recently struck a franchise agreement’s choice of law provision after concluding that the state in which the franchise was located had a materially greater interest in the dispute than the state whose law was chosen by contract. Show-Me’s Franchises, Inc. v. Sullivan, 2014 U.S. Dist. LEXIS 171507 (S.D. Ill. Dec. 11, 2014). In a case started by Show-Me, Sullivan brought counterclaims alleging violations of the Indiana Deceptive Franchise Practice Act, the Illinois Franchise Disclosure Act, and Indiana common law. He argued that although the parties’ franchise agreement contained a choice of law provision that designated Illinois law, the protections of Indiana’s franchise laws could not be contracted away.

The court agreed that Indiana public policy might override a contractual choice of law provision where Indiana has a “materially greater interest” in the dispute than the state whose law was chosen to apply. It went on to conclude that while Show-Me was an Illinois corporation and the parties’ franchise agreement was at least partly negotiated in Illinois, Indiana had a materially greater interest in the dispute because the franchise was located in Indiana, relevant witnesses and documents were located in the state, and the contract was performed there. After striking the franchise agreement’s contractual choice of Illinois law provision and performing a conflict of law analysis, the court held that Indiana’s substantive law governed the parties’ dispute.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here



















Blog Authors