What is the potential consequence if the Aerus franchise agreement contains a provision inconsistent with California law?

According to Aerus's 2025 Franchise Disclosure Document, if any provision within the franchise agreement is inconsistent with California law, then California law will take precedence and control that specific aspect of the agreement. This protection is explicitly afforded to franchisees under California Business and Professions Code Sections 20000 through 20043, which address franchise termination, transfer, or non-renewal. This means that even if the Aerus franchise agreement is written to favor the franchisor on those topics, California law will override those terms to protect the franchisee's rights.

Several specific clauses commonly found in franchise agreements may conflict with California law. For example, the FDD notes that Aerus's franchise agreement stipulates termination upon bankruptcy, a provision that may not be enforceable under Federal bankruptcy law. Similarly, a covenant not to compete extending beyond the franchise term might not hold up in California courts. The agreement also includes a liquidated damages clause, but such clauses are sometimes unenforceable under California Civil Code Section 1671. Finally, the requirement for binding arbitration to occur in Dallas, Texas, with costs borne by the non-prevailing party, may also be challenged under California law.

Aerus franchisees in California should be aware that certain protective clauses are in place. Specifically, no statement or acknowledgement signed by a franchisee can waive claims under state franchise law, including claims of fraud in the inducement, or disclaim reliance on statements made by Aerus. This provision supersedes any conflicting terms in the franchise agreement, ensuring franchisees retain their legal rights. Furthermore, the FDD explicitly states that its websites have not been reviewed or approved by the California Department of Financial Protection and Innovation, advising potential franchisees to direct any complaints about the website's content to that department.

Given these potential conflicts and protections, Aerus encourages prospective franchisees to seek independent legal counsel to understand how California and federal laws apply to the franchise agreement. This is particularly important for provisions that restrict venue to a forum outside California, as these may be subject to legal challenges under Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act. By consulting with an attorney, franchisees can ensure they fully understand their rights and obligations under both the franchise agreement and California law.