For a Belocal franchise in Hawaii, what is the effect of the Hawaii Franchise Investment Law on the terms of the franchise agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
THESE FRANCHISES WILL BE/HAVE BEEN FILED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF HAWAII. FILING DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS OR A FINDING BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING.
THE FRANCHISE INVESTMENT LAW MAKES IT UNLAWFUL TO OFFER OR SELL ANY FRANCHISE IN THIS STATE WITHOUT FIRST PROVIDING TO THE PROSPECTIVE FRANCHISEE, AT LEAST SEVEN DAYS PRIOR TO THE EXECUTION BY THE PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT LEAST SEVEN DAYS PRIOR TO THE PAYMENT OF ANY CONSIDERATION BY THE FRANCHISEE, WHICHEVER OCCURS FIRST, A COPY OF THE FRANCHISE DISCLOSURE DOCUMENT, TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE.
THIS FRANCHISE DISCLOSURE DOCUMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND FRANCHISEE.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Hawaii Franchise Investment Law impacts the franchise agreement by ensuring certain protections and disclosures for prospective franchisees in Hawaii. Specifically, the law mandates that Belocal must provide a copy of the Franchise Disclosure Document (FDD) and all proposed agreements to the prospective franchisee at least seven days before the earlier of either the execution of any binding agreement or the payment of any consideration. This provision aims to ensure that franchisees have adequate time to review the documents and seek legal counsel before committing to the franchise. The FDD itself is described as a summary of certain material provisions, and franchisees are directed to the actual contract for a complete understanding of their rights and obligations.
Furthermore, the Hawaii Franchise Investment Law ensures that no statement, questionnaire, or acknowledgment signed by the franchisee can waive claims under applicable state franchise law, including claims related to fraud in the inducement, or disclaim reliance on statements made by Belocal or its representatives. This protection is significant because it prevents franchisees from inadvertently giving up their legal rights through standard form agreements or acknowledgments. This provision supersedes any other conflicting terms in any document executed in connection with the franchise, reinforcing the importance of state franchise law in protecting franchisees.
In practical terms, this means that a Belocal franchisee in Hawaii cannot be forced to waive their rights under Hawaii franchise law, even if other parts of the franchise agreement might suggest otherwise. This provides an additional layer of security for the franchisee, ensuring that they retain the ability to pursue legal remedies if they believe they have been defrauded or misled. The amendment to the franchise agreement for Hawaii-based franchisees explicitly incorporates these protections, underscoring the importance of adhering to Hawaii's franchise laws. Prospective franchisees should carefully review the Hawaii addendum to the franchise agreement to fully understand their rights and obligations under Hawaii law.