What is the consequence if a provision of the Belocal franchise agreement is found to conflict with existing law?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Enforceability. If any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not affect any other provision hereof, and this Agreement will be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.
a. California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer, or non-renewal of a franchise. If the Agreement contains a provision that is inconsistent with the law, the law will control.
If the Agreement contains a provision that is inconsistent with the Franchise Act, the provisions of the Agreement will be superseded by the Act's requirements and will have no force or effect.
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- Severability. Except as expressly provided to the contrary herein, each portion, section, part, term, and provision of this Transfer Agreement will be considered severable; and if, for any reason, any portion, section, part, term, or provision is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such determination will not impair the operation of, or have any other effect upon, the other portions, sections, parts, terms, or provisions of this Transfer Agreement that may remain otherwise intelligible, and the latter will continue to be given full force and effect and bind the parties; the invalid portions, sections, parts, terms, or provisions will be deemed not to be part of this Transfer Agreement; and such portion, section, part, term, or provision as similar as possible to that which was severed will automatically be added, which addition will be valid and not contrary to or in conflict with any law or regulation.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the consequences of a provision conflicting with existing law depend on the specific jurisdiction. In general, the franchise agreement includes clauses addressing severability and the controlling nature of applicable laws. For instance, the franchise agreement specifies that if any provision is deemed invalid, illegal, or unenforceable, it will not affect the remaining provisions, and the agreement will be interpreted as if the invalid provision never existed.
In California, if a provision in the Belocal franchise agreement is inconsistent with California law, the law will take precedence. This specifically applies to provisions concerning termination, transfer, or non-renewal of the franchise, covenants not to compete, liquidated damages clauses, the application of Texas laws, and binding arbitration. Similarly, in Minnesota, the Franchise Act supersedes any inconsistent provisions within the agreement. Releases of claims or acknowledgments that negate statements violating the Franchise Act will exclude claims arising under the Franchise Act and will be considered void.
For transfers of the franchise agreement, Belocal's FDD states that if any part of the transfer agreement is found to conflict with existing law, it will be considered severable, and the remaining parts will remain in effect. The invalid provision will be removed, and a similar, valid provision will be added automatically. This ensures the transfer agreement remains enforceable to the greatest extent possible while complying with applicable laws and regulations.