The U.S. District Court for the Southern District of Ohio largely denied a franchisor’s motion to dismiss and transfer venue in a dispute brought by an Ohio franchisee that alleged it was induced to enter into a franchise agreement through misrepresentations regarding franchise profitability, supplier pricing, product sourcing, and financial performance. Array of Soap, LLC v. Magnolia Soap & Bath Co. FRCH, LLC, 2026 WL 2883307 (S.D. Ohio Sept. 25, 2026). Magnolia Soap & Bath, a franchisor of retail stores offering handmade soaps, bath products, and related personal-care items, and franchisee Array of Soap entered into a franchise agreement in April 2023. Per Array of Soap, the franchise relationship got off to a rough start: Magnolia failed to provide promised assistance with on-site training and a grand opening campaign, and Array discovered higher mark-ups of products from Magnolia than it anticipated and experienced delivery issues and supply shortages. About fifteen months after opening its franchised store without much success, Array pursued claims against Magnolia. The court rejected Magnolia’s argument that the action should be dismissed for failure to participate in pre-suit mediation since Magnolia failed to request mediation within the contractual 30-day period after receiving notice of the claims. The court also declined to transfer the action to Mississippi notwithstanding the franchise agreement’s forum-selection and choice-of-law provisions; instead, the court allowed Array’s claims to proceed in Ohio.
In reaching its decision, the court relied on the franchise agreement’s notice and mediation provisions, as well as the Ohio Business Opportunity Plans Act (OBOPA) and Sixth Circuit precedent. The court concluded that Ohio has a strong public policy against out-of-state venue and choice-of-law provisions in agreements covered by OBOPA and declined to enforce the franchise agreement’s forum-selection clause at the pleading stage. The court dismissed Array’s claims against Magnolia’s owner for failure to plead facts sufficient to justify piercing the corporate veil but otherwise denied Magnolia’s motion to dismiss and transfer venue.