For a Belocal franchise in California, what is the potential impact of the amendment on the agreement's arbitration provision?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- f. The 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 the 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, and this provision may be impacted by California law. The arbitration will occur in the city where Belocal has its principal business office, and costs will initially be split equally between the parties. However, the arbitrator must award the prevailing party their reasonable costs and fees, including attorney's fees.
Prospective Belocal franchisees in California should be aware that California and federal laws, such as Business and Professions Code section 20040.5, Code of Civil Procedure section 1281, and the Federal Arbitration Act, may affect the enforceability of provisions restricting the venue to a forum outside of California.
To ensure full understanding of their rights, Belocal encourages prospective franchisees to seek independent legal counsel to determine how California and federal laws apply to the arbitration provisions within the franchise agreement. This is particularly important because California law may supersede certain aspects of the agreement, potentially altering the location and process of arbitration.