ALERT – California's Prohibition of Out-of-State Forum Selection Clauses in Franchise Agreements is Alive and Well

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A California District Court ruling in Frango Grille USA, Inc. v. Pepe’s Franchising Ltd. provides a certain amount of comfort to California franchisees that any disputes with foreign franchisors will be venued in California. By doing so, the Frango Court managed to work around a recent United States Supreme Court ruling which held that contractual forum selection clauses would be enforced under Federal law in all but the most extraordinary circumstances. The Frango decision is a victory for California franchisees, and should serve as a warning to foreign franchisors that they will have to litigate disputes with California franchisees in California. In January 2014, we issued an Alert advising that the United States Supreme Court in Atlantic Marine Construction Company v. United States...
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