May 26, 2026|Franchise Frontlines
May 26, 2026 | United States District Court for the District of New Jersey | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Robert Kirsch of the United States District Court for the District of New Jersey granted Massage Luxe International, LLC’s motion and transferred a franchise-related area development dispute to the United States District Court for the Eastern District of Missouri. Plaintiffs, a New Jersey resident and New Jersey limited liability company, alleged that Massage Luxe sold them area development rights, later terminated the area development agreement, stopped making contracted payments, and violated the New Jersey Franchise Practices Act. Massage Luxe relied on a mandatory forum selection clause requiring actions arising out of or relating to the area development agreement to be brought in Missouri state court or the Eastern District of Missouri. Plaintiffs argued that enforcing the clause would contravene New Jersey public policy under Kubis & Perszyk Associates, Inc. v. Sun Microsystems, Inc. The court held that federal law governs enforceability of forum selection clauses, that New Jersey’s public policy did not automatically displace the federal presumption favoring enforcement, and that plaintiffs failed to make the required strong showing that enforcement would violate New Jersey public policy.
Relevant Background
Massage Luxe International is a Missouri limited liability company and franchisor that sells rights to operate spa franchises. In 2014, plaintiffs Sapan Inamdar and SPI Investments, LLC entered into an Area Development Agreement with Massage Luxe. Plaintiffs paid $200,000 for the agreement and agreed to support franchisees in the covered territory and work to develop new Massage Luxe franchises.
In exchange, plaintiffs alleged they were entitled to a portion of monthly franchise fees paid to Massage Luxe by franchisees in the territory, reduced franchise fees for their own franchises, and the exclusive right and license to use the Massage Luxe system and marks as necessary to recruit, train, and service franchisees. Plaintiffs alleged that Massage Luxe had assured them the area development agreement was a fungible asset that it could not and would not seek to rescind.
On May 31, 2022, Massage Luxe sent plaintiffs a letter terminating the area development agreement and plaintiffs’ rights under it. According to plaintiffs, Massage Luxe then stopped making payments due under the agreement, depriving them of approximately 26 months of disbursements. Plaintiffs also alleged that they had not been compensated for the value of the area development agreement itself.
The termination generated multi-forum litigation. One or both plaintiffs filed three Missouri state-court actions asserting contractual claims against Massage Luxe. Massage Luxe then filed its own Missouri state-court action against plaintiffs. Plaintiffs later filed this New Jersey action, asserting claims under the New Jersey Franchise Practices Act, negligent misrepresentation, breach of contract, unjust enrichment, and declaratory relief. Massage Luxe removed the action to federal court and moved to dismiss or stay based on, among other things, the area development agreement’s forum selection clause.
Decision
The court began with the language of the forum selection clause. The clause provided that if SPI instituted any action arising out of or relating to the area development agreement, the action had to be brought in the Circuit Court of St. Louis County, Missouri or in the United States District Court for the Eastern District of Missouri. The clause also stated that SPI submitted to those courts’ jurisdiction and waived any objection to jurisdiction or venue.
The court analyzed enforcement in two steps. First, it considered whether the forum selection clause was enforceable and applicable. Second, it applied the transfer analysis under 28 U.S.C. § 1404(a) and Atlantic Marine. The court found the clause mandatory and applicable because the New Jersey action arose from the area development agreement. Plaintiffs did not dispute those points.
The principal issue was whether the clause should be enforced despite New Jersey franchise policy. Under federal law, forum selection clauses receive a strong presumption of enforceability and should be enforced unless the resisting party shows enforcement would be unreasonable. A resisting party may attempt to show that the selected forum is so gravely difficult and inconvenient that the party would be deprived of its day in court, that the clause resulted from fraud or overreaching, or that enforcement would contravene a strong public policy of the forum state.
Plaintiffs relied exclusively on public policy. They invoked Kubis, where the New Jersey Supreme Court recognized the New Jersey Franchise Practices Act’s policy of leveling the playing field for New Jersey franchisees and preventing exploitation by franchisors with superior economic resources. Kubis held that forum selection clauses in franchise agreements are presumptively invalid under New Jersey law because general enforcement of such clauses could frustrate the NJFPA’s legislative purpose.
The court carefully separated New Jersey’s underlying public policy from New Jersey’s chosen method of enforcing that policy. In the court’s view, Kubis identified the public policy as protecting New Jersey franchisees and leveling the playing field. The Kubis presumption against forum selection clauses was the mechanism New Jersey courts selected to advance that policy. But federal law governs enforceability of forum selection clauses in federal court. The court reasoned that importing Kubis’s state-law presumption into the federal enforcement analysis would effectively transform a federal question into a state-law question.
That distinction drove the result. The court did not disregard Kubis. It accepted Kubis as articulating New Jersey’s public policy. But it held that plaintiffs had not made the required strong showing that enforcing this specific forum selection clause would contravene that policy. Plaintiffs focused on Massage Luxe’s alleged failure to overcome the Kubis presumption. Because that presumption did not control the federal analysis, plaintiffs’ argument failed to overcome the federal presumption favoring enforcement.
The court then considered the forum non conveniens factors as modified by Atlantic Marine. Because a valid forum selection clause existed, the court deemed the private-interest factors to weigh entirely in favor of the preselected forum. It therefore considered only the availability of an adequate alternative forum and the relevant public-interest factors. The court found no indication that Massage Luxe was not amenable to process in the Eastern District of Missouri or that plaintiffs’ claims were not cognizable there. Plaintiffs had already sued Massage Luxe in Missouri three times, which further supported the adequacy of the Missouri forum.
The public-interest factors also did not overcome the clause. Administrative difficulty and court congestion favored transfer because the District of New Jersey had substantially more civil cases per judge than the Eastern District of Missouri. Local interests were in equipoise because New Jersey has an interest in protecting franchisees, while Missouri has an interest in regulating its businesses. Familiarity with applicable law was neutral. The court noted that, after transfer under Atlantic Marine, the transferee court may not apply the original forum’s choice-of-law rules, which could affect whether the NJFPA applied given the agreement’s Missouri choice-of-law provision. But the court also recognized that even if the NJFPA applied, the New Jersey Supreme Court had expressed confidence that courts in other states would fairly apply the statute.
The court concluded that plaintiffs had fallen well short of carrying their heavy burden to show unusual or extraordinary circumstances sufficient to overcome the forum selection clause. Instead of dismissing the case outright, the court transferred the action to the Eastern District of Missouri.
Looking Forward
This decision provides franchisors with a useful reminder that forum selection clauses remain meaningful litigation tools, even in states with franchise-specific public policies. The court did not hold that New Jersey franchise policy is irrelevant. To the contrary, it acknowledged the policy recognized in Kubis. But it refused to convert New Jersey’s state-law presumption against franchise forum clauses into the governing federal standard. That distinction matters in removed franchise cases.
For franchisors, the strongest lesson is that federal enforceability analysis can differ from state franchise-law presumptions. Kubis remains important because it expresses New Jersey’s policy of protecting franchisees from overreaching and ensuring access to relief under the NJFPA. But in federal court, the party resisting a mandatory forum clause must do more than invoke Kubis. The resisting party must make a strong showing that enforcement of the particular clause, in the particular circumstances, would violate a strong public policy or otherwise satisfy one of the recognized exceptions to enforcement.
The decision also illustrates the continuing force of Atlantic Marine. Once a court finds a mandatory forum selection clause valid and applicable, the plaintiff’s chosen forum and other private-interest factors ordinarily drop out of the analysis. The court then asks whether an adequate alternative forum exists and whether public-interest factors justify disregarding the parties’ chosen forum. That is a demanding standard. In this case, plaintiffs had already filed multiple Missouri actions involving the dispute, and the court found no basis to conclude that the Eastern District of Missouri could not adjudicate their claims.
Franchisors should not overread the opinion. This was a transfer decision, not a merits ruling on the NJFPA, the termination of the area development agreement, or the enforceability of the agreement’s choice-of-law provision. The court also did not hold that every forum selection clause in a New Jersey franchise dispute will be enforced. A different record could present a stronger showing of overreaching, deprivation of a day in court, or a direct conflict with public policy. The practical point is narrower but important: a franchisee resisting transfer in federal court must present case-specific reasons why enforcement is improper, not simply rely on the general Kubis presumption.
The opinion also has value for drafting and litigation strategy. Franchisors that want forum selection clauses enforced should draft them in mandatory terms, identify the selected state and federal courts, include jurisdictional consent and venue waiver language, and ensure the clause reaches claims “arising out of or relating to” the agreement. Massage Luxe benefited from language that required actions to be brought in Missouri and from the plaintiffs’ inability to dispute that the New Jersey case fell within the clause.
For area development agreements, the case is particularly relevant. Area developers often sit between franchisors and unit franchisees, with rights involving territory development, franchisee support, fee sharing, system marks, and operational obligations. Disputes over those rights can produce parallel litigation in multiple states. This decision shows why franchisors should pay close attention to dispute-resolution provisions in area development agreements, not only in unit franchise agreements.
Finally, the decision reinforces that procedural provisions can materially affect franchise litigation. The forum clause did not decide whether Massage Luxe properly terminated the agreement, whether plaintiffs had valid NJFPA claims, or whether Missouri law would ultimately apply. But it did determine where those issues would be litigated. For franchisors, that can be a significant practical advantage, particularly when related cases are already pending in the selected forum and the franchisor has a legitimate interest in centralized dispute resolution.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
