For All County franchises sold in California, what is the purpose of the addendum to the Franchise Agreement?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum pertains to franchises sold in the State of California and is for the purpose of complying with California statutes and regulations. Notwithstanding anything which may be contained in the body of the Franchise Agreement to the contrary, the Agreement is amended to include the following:
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- The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business.
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- Article 23.4. of the Franchise Agreement contains a covenant not to compete which extends beyond the term of the franchise. This provision may not be enforceable under California law.
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- Article 25.13. of the Franchise Agreement requires the application of the laws of Florida. This provision may not be enforceable under California law.
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- 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 a disclaiming reliance on or the right to rely upon any statement made or information provided by the 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.
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- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise. See NASAA STATEMENT OF POLICY REGARDING THE USE OF FRANCHISE QUESTIONNAIRES AND ACKNOWLEDGMENTS.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, the addendum to the Franchise Agreement for franchises sold in California is to ensure compliance with California statutes and regulations. The addendum modifies specific aspects of the standard Franchise Agreement to align with California law.
Several key provisions are addressed in the addendum. First, it acknowledges that All County has not demonstrated adequate capitalization, leading to a fee deferral where initial fees from California franchisees are not collected until pre-opening obligations are met and the franchisee is open for business. Second, the addendum notes that the non-compete covenant extending beyond the franchise term, as well as the requirement for applying Florida laws, may not be enforceable under California law.
Additionally, the addendum includes stipulations to protect franchisees from waiving claims of fraud or disclaiming reliance on franchisor statements. These provisions supersede any conflicting terms in other documents, reinforcing franchisee rights under California law. These modifications ensure that the All County franchise agreement adheres to California's specific legal requirements and provides additional protections for franchisees operating in the state.