If the Aerus franchise agreement contains a provision inconsistent with California Business and Professions Code Sections 20000 through 20043, which law will control?
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, if there is a conflict between the franchise agreement, which requires application of Texas law, and California Business and Professions Code Sections 20000 through 20043, California law will take precedence. This is particularly relevant for Aerus franchisees in California.
Specifically, the FDD states that no disclaimer, questionnaire, clause, or statement signed by a franchisee can be interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on statements made by Aerus or its representatives. This protection extends to any statement or information that materially induced the franchisee's investment. This provision overrides any conflicting terms in any document related to the franchise agreement.
Furthermore, no statement, questionnaire, or acknowledgement signed by an Aerus franchisee can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Aerus or its representatives. This ensures that franchisees retain their rights under California franchise law, regardless of any conflicting terms in the franchise agreement. This provision also supersedes any other term of any document executed in connection with the franchise.