If a section of the Belocal franchise agreement is deemed invalid, what happens to the rest of the agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as expressly provided to the contrary herein, each portion, section, part, term, and provision of this Agreement shall be considered severable; and if, for any reason, any portion, section, part, term, or provision is determined by a court or agency having valid jurisdiction to be invalid and contrary to, or in conflict with, any existing or future law or regulation, such determination shall not impair the operation of, or have any other effect upon, the other portions, sections, parts, terms, or provisions of this Agreement that may remain otherwise intelligible, and the latter shall continue to be given full force and effect and bind the parties; the invalid portions, sections, parts, terms, or provisions shall be deemed not to be part of this Agreement; and such portion, section, part, term, or provision as similar as possible to that which was severed shall automatically be added, which addition shall be valid and not contrary to or in conflict with any law or regulation.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement contains a severability clause. This means that if a court or agency with jurisdiction determines that any part of the agreement is invalid or conflicts with existing or future laws, the remaining parts of the agreement will still be in effect. The invalid portion will be removed from the agreement, and a similar provision that complies with the law will be added automatically. This ensures that the rest of the agreement remains binding and enforceable.
This severability clause protects both Belocal and the franchisee by maintaining the integrity of the agreement even if certain provisions are challenged and found to be unenforceable. It reflects a common practice in franchising, where franchise agreements are complex and may be subject to legal challenges. By including this clause, Belocal aims to minimize disruptions and ensure that the core aspects of the franchise relationship continue to be governed by the agreement.
However, prospective franchisees should be aware that the replacement of a severed provision with a 'similar' one could still have implications. While the intention is to maintain the original intent of the agreement, the new provision might not be identical and could affect the franchisee's rights or obligations. It is advisable for franchisees to seek legal counsel to understand the potential impact of any such changes.
Furthermore, franchisees should be aware of state-specific amendments to the franchise agreement. For example, the FDD includes amendments for California, North Dakota, and Rhode Island, which address issues such as termination rights, covenants not to compete, governing law, and arbitration. These amendments highlight that certain provisions of the standard franchise agreement may not be enforceable under the laws of specific states, and franchisees should carefully review these amendments to understand their rights and obligations in their respective states.