What California law governs the rights of Aerus franchisees concerning termination, transfer, or non-renewal of a franchise?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
The franchise agreement requires application of the laws of the State of Texas. This provision may not be enforceable under California law.
The maximum interest rate in California is 10% annually. We do not offer financing to California franchises.
Neither the Franchisor nor any person listed in Item 2 of this offering circular is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.
No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, California law includes provisions that protect franchisees. Specifically, any disclaimer or statement signed by an Aerus franchisee cannot be interpreted as waiving claims of fraud or disclaiming reliance on statements made by Aerus that induced the franchisee's investment. This protection applies whether the fraud claim is based on common law or statute. This provision takes precedence over any conflicting terms in the franchise agreement.
Additionally, any statement or acknowledgment from the franchisee cannot waive claims under California's franchise law, including fraud in the inducement, or disclaim reliance on statements made by Aerus or its representatives. This protection also supersedes any conflicting terms in the franchise agreement.
Furthermore, the FDD indicates that the franchise agreement requires the application of Texas law, but this may not be enforceable under California law. This suggests that California law may override certain aspects of the franchise agreement, particularly those that conflict with California's franchise regulations. These regulations aim to protect franchisees from unfair practices and ensure they have legal recourse in case of disputes or misrepresentation.