Does the Bft Franchise Agreement contain a liquidated damages clause that might be unenforceable under California Civil Code Section 1671?

According to the 2025 Bft Franchise Disclosure Document, the Franchise Agreement does contain a liquidated damages clause. The FDD explicitly states that under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable. This means that if Bft attempts to enforce a liquidated damages clause against a franchisee in California, a court might find that clause to be invalid under certain circumstances as defined by California law.

This disclosure serves as a warning to potential Bft franchisees in California. Liquidated damages clauses are designed to predetermine the amount of damages one party must pay to the other in the event of a breach of contract. The enforceability of such clauses depends on various factors, including whether the damages are a reasonable estimate of actual losses and whether the actual damages would be difficult to determine.

Prospective Bft franchisees in California should seek legal counsel to review the Franchise Agreement and understand the specific terms of the liquidated damages clause. They should also inquire about the circumstances under which Bft might seek to enforce such a clause and the potential financial implications. Understanding the limitations imposed by California Civil Code Section 1671 is crucial for assessing the risks associated with investing in a Bft franchise.