In the context of a Black Bear Diner franchise agreement, what law supersedes any conflicting terms?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement and the rights of the parties will not take effect unless and until this Agreement is accepted and signed by Franchisor. Except to the extent this Agreement or any particular dispute is governed by the U.S. Trademark Act of 1946 or other federal law, this Agreement shall be governed by and construed in accordance with the laws of the State of California (without reference to its conflict of laws principles), excluding any law regulating the sale of franchises or governing the relationship between a franchisor and franchisee (developer), unless the jurisdictional requirements of such laws are met independently without reference to this Section; provided, however, that if the covenants in Section 10 of this Agreement would not be enforceable under the laws of California, and the Development Area is located outside of California, then such covenants shall be interpreted and construed under the laws of the state in which the Development Area is located.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, the franchise agreement is generally governed by California law, excluding laws regulating franchise sales or franchisor-franchisee relationships, unless the jurisdictional requirements of such laws are independently met. However, the U.S. Trademark Act of 1946 or other federal law will take precedence if the agreement or a specific dispute falls under its jurisdiction. Furthermore, if the non-compete covenants in Section 10 are unenforceable under California law and the Development Area is outside California, the laws of the state where the Development Area is located will govern those specific covenants.
For a prospective Black Bear Diner franchisee, this means that the interpretation and enforcement of the franchise agreement will primarily be based on California law, unless federal trademark law applies or the non-compete provisions are at issue and the Development Area is located outside of California. It is important to note that franchise laws specific to certain states are excluded unless their jurisdictional requirements are met independently.
This clause aims to provide clarity and predictability in the legal interpretation of the franchise agreement. However, franchisees should be aware that the governing law may shift depending on the specific issue in dispute and the location of their Development Area. It is advisable for potential franchisees to seek legal counsel to fully understand the implications of this choice of law provision, especially concerning non-compete clauses and potential disputes arising from the franchise agreement.