For a Belocal franchise in California, what should prospective franchisees consult regarding venue restrictions?
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, prospective franchisees in California should consult with private legal counsel regarding venue restrictions. The franchise agreement mandates binding arbitration, which will occur in the city where Belocal has its principal business office. The costs of arbitration are initially shared equally between both parties, but the arbitrator must award the prevailing party reasonable costs and fees, including attorney's fees.
Given that the arbitration venue is outside of California, prospective Belocal franchisees are encouraged to seek legal counsel. This is to determine how California and federal laws apply to any provisions in the franchise agreement that restrict the venue to a forum outside the state. Specifically, the FDD mentions consulting 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.
This recommendation highlights the importance of understanding the legal implications of the franchise agreement, especially concerning dispute resolution. By consulting with an attorney, franchisees can be better informed about their rights and obligations under both California and federal law, ensuring they are prepared for any potential legal challenges that may arise during the franchise term.