Legal Question in Business Law in Texas

Franchise Agreement

I am thinking about starting a franchise, the corporation is based in California and my franchise will be in Texas. I have tried to ask the corp. for a straight answer on which state laws apply so that I know if I need to set up an LP or LLC for lower liability risks on my own personal property (if your ''sole proprietor'' business gets sued in Texas, court can NEVER rule against your house or any personal assets you retained before the procurement of your company, or leave you with less than 50k cash). When I ask, this is the answer:

Our agreement does state that subject to Stroller Strides' rights under

federal trademark law and the parties' rights under the Federal

Arbitration Act, the agreement is governed by the laws of the state

where the business is located.

Is that where MY franchise is located? Would I risk losing my home and other assets? I'm confused, and even more so after looking up rulings based on this law that state arbitration agreements trump my state laws. Please help!


Asked on 5/22/09, 3:04 pm

1 Answer from Attorneys
David Leon David L. Leon, P.C.

Re: Franchise Agreement

You have a few different issues in there. Typically, the franchise agreement will select the state's laws of the franchisor. Every franchise agreement is different. Before investing in a franchise, have a lawyer review it with you in detail. It's a large investment and usually complex. Make sure you understand it 100% before you sign.

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Answered on 5/22/09, 5:53 pm


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