Peter Lagarias posted at BlueMauMau a very compelling argument as why it’s important to pass legislation in each state to void litigation forum/venue clauses and allow litigation or dispute resolution in occur in the State the franchise owner has his/her business.
Here are is an excerpt:
Most franchise agreements provide for venue of franchise lawsuits in the home state of the franchisor. In football terms this is called home field advantage. National Football League teams spend the entire regular season jousting for home field in the playoffs with the Seattle Seahawks boasting that they have the most boisterous home field advantage. But franchising lawsuits are too important to give franchisors an unfair forum advantage. Franchisees usually have their life savings and livelihoods on the line in any litigation with their franchisors.
How big of an advantage is home state venue for franchisors?
Imagine a Hawaiian franchisee, in financial distress and seeking relief to avoid termination, but having her case heard in the franchisor’s home state of Florida. She must now locate additional counsel in the franchisor’s state. She then must also pay to travel to Florida for preliminary injunctions, discovery motions and trials. Plus she must pay to fly her witnesses from her business to the mainland and beyond for trial. Like many franchisees faced with such clauses and distant expensive litigation, she may have no choice but to give up because she cannot afford to litigate across the country.
Read more at BlueMauMau
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Comments by Jim Coen, Executive Director, Maine Franchise Owners Association.
One of the most common provisions in franchise agreements is the “forum/venue-selection” clause. Under these provisions, the parties agree that any lawsuit filed by either one of the parties will be brought only in a court in a specified city and state. The chosen court will almost always be in the city where the franchisor has its home office, this clause can often create leverage for the franchisor to settle the dispute in their favor.
A forum-selection clause is used as a cost-shifting tool in franchise contracts. The franchisor, counts on the fact that it would be financially burdensome to have the franchise owner hire lawyers to defend or prosecute lawsuits against the franchisor in a out of state venue. Using the forum-selection provision, the franchisor shifts the burden of traveling for a lawsuit (and obtaining counsel in a sometimes-remote forum) to the franchisee.
Two states, Michigan and Washington have laws that consider forum-selection clauses in franchise agreements to be void – so that a franchise owner protected by the state law will be able to sue and be sued in his or her home state. Other states will stop short of voiding those provisions, but will permit a franchisee who sues the franchisor first to do so in his / her home jurisdiction.
In Maine the Auto Dealers have had “void venue protection” with the Automobile Manufacturers since the 70’s, resulting in litigation having to take place in Maine Courts.