For a Belocal franchise in California, what is the effect of the amendment on the agreement's liquidated damages clause?

According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement contains a liquidated damages clause. For California franchisees, this clause's enforceability is specifically addressed. The document states that under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable. This means that if the liquidated damages clause in Belocal's standard franchise agreement does not comply with California law, it may not be enforceable in California.

This amendment is crucial for prospective Belocal franchisees in California because it clarifies that California law will take precedence over any conflicting terms in the franchise agreement. California law aims to protect franchisees from unfair or overly burdensome liquidated damages.

Prospective franchisees should seek legal counsel to review the specific liquidated damages clause in the Belocal franchise agreement and assess its enforceability under California law. This will help them understand their potential financial exposure if they breach the agreement and ensure they are not subject to unlawful penalties.