An update on choice of law in franchise agreements: a trend toward unenforceability and limited application

Article Abstract:

The choice of law for franchise agreements is developing into problems of limited application and unenforceability. The issue is over which state's law applies to the franchise if businesses are in different states. The decisions of Modern Computer Systems, Inc v. Modern Banking Systems, Inc and Tele-Save Merchandising Co v. Consumers Distributing Co illustrate successful waiving of franchise laws of states in favor of the states chosen by the contracting parties. However, other cases indicate the rarity of these successes.

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Dependence and reliance: keys to unshackling co-branding alliances from federal franchise rule compliance

Article Abstract:

Newer and less affluent franchisors can particularly benefit from exclusions from federal pre-sale registration and disclosure laws when making co-branding alliances. Two practical methods leading to exclusion which may be of possible use are based upon the FTC's Franchise Rule's element of significant control or assistance and the Rule's exemption for fractional franchises. Nonregulation of co-branding alliances can aid in efficient and profitable business relations but is not proper for all such alliances.

Strategic alliances (Business)

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Effect of arbitration and choice of law clauses on the application of Puerto Rico's Dealers Act

Article Abstract:

Practitioners should carefully draft and include choice of law provisions within franchise agreement arbitration clauses because doing so may preclude applicability of the Puerto Rico Dealer Act or similar laws. This type of drafting may help ensure enforceability and will authorize an arbitrator to decide on the applicable franchise law. The Federal Arbitration Act will be applicable in US-Puerto Rico franchise disputes, and may be preferable to the Puerto Rican statute.

Interpretation and construction, Puerto Rico, Commercial arbitration agreements

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