What is the effect of a court determining a provision of the Belocal franchise agreement to be invalid?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as expressly provided to the contrary herein, each portion, section, part, term, and provision of this Agreement shall be considered severable; and if, for any reason, any portion, section, part, term, or provision is determined by a court or agency having valid jurisdiction to be invalid and contrary to, or in conflict with, any existing or future law or regulation, such determination shall not impair the operation of, or have any other effect upon, the other portions, sections, parts, terms, or provisions of this Agreement that may remain otherwise intelligible, and the latter shall continue to be given full force and effect and bind the parties; the invalid portions, sections, parts, terms, or provisions shall be deemed not to be part of this Agreement; and such portion, section, part, term, or provision as similar as possible to that which was severed shall automatically be added, which addition shall 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 franchise agreement contains a severability clause. This means that if a court or agency with jurisdiction determines that any part of the agreement is invalid, contrary to, or in conflict with existing or future laws, that determination will not affect the remaining parts of the agreement. The rest of the agreement will remain in full effect and continue to bind the parties.
Specifically, the invalid portion will be removed from the agreement, as if it was never included. Furthermore, the agreement will automatically be amended to include a provision that is as similar as possible to the severed part, so long as the new provision is valid and does not conflict with any laws or regulations. This ensures that the agreement remains as close as possible to the original intent of both Belocal and the franchisee, even if certain parts are deemed unenforceable.
This type of severability clause is fairly standard in franchise agreements. It protects both the franchisor and the franchisee by ensuring that the entire agreement does not become void due to a single unenforceable clause. It also provides a mechanism for replacing the invalid provision with something similar, which helps to maintain the balance of rights and obligations between the parties. However, franchisees should be aware of the potential for changes to the agreement if a provision is severed and replaced, and should seek legal advice if they have concerns about the implications of such changes.