What happens if a provision in the Aerus franchise agreement is inconsistent with California law?
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.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the franchise agreement stipulates that Texas law governs the agreement. However, this may not be enforceable under California law. The FDD also states that no statement signed by a franchisee can waive claims of fraud or disclaim reliance on statements made by Aerus. This specific provision overrides any other conflicting terms in the franchise agreement.
This means that even though the franchise agreement specifies Texas law, certain protections afforded to franchisees under California law, particularly those relating to fraud and reliance on franchisor statements, cannot be waived. This is a crucial protection for franchisees, ensuring they can pursue legal remedies if they believe they were misled during the franchise sales process.
Furthermore, the document explicitly states that websites associated with Aerus have not been reviewed or approved by the California Department of Financial Protection and Innovation. It directs any complaints regarding website content to the Department. This disclaimer suggests that California franchisees should be especially diligent in verifying information presented on the company's websites and understand their rights under California franchise law, regardless of what the franchise agreement says about being governed by Texas law.