For a Belocal franchise in California, what is the effect of the amendment on the disclaimer of reliance?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
orations Code Sections 31303 and 31304.
Any provision of a franchise agreement, franchise disclosure document, acknowledgement, questionnaire, or other writing, including any exhibit thereto disclaiming or denying any of the following shall be deemed contrary to public policy and shall be void and unenforceable:
- a. Representations made by the franchisor or its personnel or agents to a prospective franchisee.
- b. Reliance by a franchisee on any representations made by the franchisor or its personnel or agents.
- c. Reliance by a franchisee on the franchise disclosure document, including any exhibit thereto.
- d. Violations of any provision of this division.
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- SECTION 31125 OF THE FRANCHISE INVESTMENT LAW REQUIRES US TO GIVE TO YOU A FRANCHISE DISCLOSURE DOCUMENT APPROVED BY THE COMMISSIONER OF FINANCIAL PROTECTION AND INNOVATION BEFORE WE ASK YOU TO CONSIDER A MATERIAL MODIFICATION OF YOUR FRANCHISE AGREEMENT.
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- The financial performance representation figures do not reflect costs of sales, operating expenses, or other costs and expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit. You should conduct an independent investigation of the costs and expenses you will incur in operating your franchise business. Franchises or former franchisees, listed in the Franchise Disclosure Document, may be one source of this information.
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- A contract which restrains a franchise from engaging in a lawful trade or business is to that extent void under California Business & Professions Code section 16600.
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- The Antitrust Law Section of the Office of the California Attorney General views maximum price agreements as per se violations of the Cartwright Act.
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Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, there are specific protections for franchisees in California regarding disclaimers of reliance. The amendment to the franchise agreement for California states that any provision that disclaims or denies representations made by Belocal, reliance by the franchisee on those representations, or reliance on the Franchise Disclosure Document itself, is considered against public policy and therefore void and unenforceable. This means Belocal franchisees in California cannot waive their right to claim they relied on information provided by Belocal or in the FDD.
This protection is further reinforced by the statement added to the agreement, ensuring that no signed statement, questionnaire, or acknowledgment can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Belocal or its representatives. This clause supersedes any other conflicting terms in the franchise agreement, strengthening the franchisee's position. This helps to ensure that Belocal franchisees can hold the franchisor accountable for the information provided during the franchise sales process.
Additionally, the FDD highlights that California Corporations Code Section 31512 voids any attempt to waive rights under the Franchise Investment Law, and Business and Professions Code Section 20010 voids waivers under the Franchise Relations Act. This means that Belocal cannot enforce any clause that requires a franchisee to give up their legal rights related to franchise laws. These provisions collectively provide a more secure legal environment for Belocal franchisees in California, ensuring they are not unfairly disadvantaged by overly restrictive contract terms.