What is the significance of the All County addendum pertaining to franchises sold in the State of California?
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 for franchises sold in California is included to comply with California statutes and regulations. This addendum modifies specific terms of the standard franchise agreement to align with California law.
One significant modification is a fee deferral condition imposed by the Commissioner, indicating that All County has not demonstrated adequate capitalization or relies on franchise fees to fund operations. This requires All County to defer collecting initial franchise fees from California franchisees until all pre-opening obligations are met and the franchise is open for business. This protects franchisees by ensuring All County fulfills its initial obligations before receiving payment.
Additionally, the addendum addresses the enforceability of certain clauses under California law. Specifically, it notes that non-compete covenants extending beyond the franchise term and provisions requiring the application of Florida laws may not be enforceable in California. The addendum also clarifies that franchisees cannot waive claims of fraud in the inducement or disclaim reliance on statements made by All County, its brokers, or representatives. These provisions are designed to protect franchisees' rights and ensure compliance with California's franchise laws, which may differ from those in other states.