For a Belocal franchise in California, what is the effect of the amendment on the arbitration provision in the Belocal Franchise Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
- e. The franchise agreement requires binding arbitration. The arbitration will occur in the city in which Franchisor maintains its principal business office at the time of the arbitration with the costs being borne by initially be paid equally by the two sides to the arbitration. The arbitrator must award to the prevailing party the reasonable costs and fees, including attorneys' fees, incurred in the arbitration. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code section 20040.5, Code of Civil Procedure section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Franchise Agreement requires binding arbitration, which will occur in the city where Belocal maintains its principal business office at the time of arbitration. The costs for arbitration will initially be paid equally by both parties. The arbitrator is required to award the prevailing party the reasonable costs and fees, including attorney's fees, incurred during the arbitration.
Prospective Belocal franchisees are advised to seek legal counsel to determine the applicability of California and federal laws, such as California Business and Professions Code section 20040.5, Code of Civil Procedure section 1281, and the Federal Arbitration Act, to any provisions of the Franchise Agreement that restrict venue to a forum outside of California.
Additionally, the California amendment to the Belocal Franchise Agreement states that to the extent that the Agreement contains provisions that are inconsistent with the California Franchise Investment Law, CAL. CORP. CODE Section 31000 et seq., and the California Franchise Relations Act, CAL. BUS. & PROF. CODE Section 20000 et seq., such provisions are amended. Any provisions in the Franchise Agreement that violate Section 1.(a-f) are deleted.