For Black Bear Diner franchises in California, to what extent is each provision of the addendum effective?
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.
Arbitration. This Agreement is a written agreement evidencing a transaction involving commerce and is, therefore, subject to the terms and provisions of the Federal Arbitration Act, Title 9 of the United States Code. All disputes arising out of or relating to this Agreement, or to any other agreements between the parties or with regard to interpretation, formation or breach of this or any other agreement between the parties, shall be settled by binding arbitration conducted in Redding, California, or such place as may be mutually agreeable to the parties, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. or at such other place as may be mutually agreeable to the parties. The decision of the arbitrators will be final and binding on all parties to the dispute; however, the arbitrators may not under any circumstances: (i) stay the effectiveness of any pending termination of this Agreement; (ii) assess punitive or exemplary damages; or (iii) make any award which extends, modifies or suspends any lawful term of this Agreement or any reasonable standard of business performance. A judgment may be entered upon the arbitration award by any state or federal court in California or the state within which the Development Area is located. The prevailing party in any action or proceeding arising under, out of, in connection with, or in relation to this Agreement or the Black Bear Diner restaurant conducted pursuant to this Agreement shall be entitled to recover its reasonable attorneys' fees and costs.
Time is of the essence of this Agreement. It will be a material breach of this Agreement to fail to perform any obligation within the time required or permitted by this Agreement. All references to time mean the time at Franchisor's office in Redding, California.
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 governed and construed in accordance with the laws of California, excluding any law regulating the sale of franchises or governing the relationship between a franchisor and franchisee, unless the jurisdictional requirements of such laws are met independently. However, if the non-compete covenants would not be enforceable under California law and the Development Area is located outside of California, then such covenants will be interpreted and construed under the laws of the state in which the Development Area is located. This means that while the agreement is generally subject to California law, there are exceptions based on the location of the Development Area and the enforceability of specific covenants.
Furthermore, the FDD states that any disputes arising out of or relating to the agreement will be settled by binding arbitration conducted in Redding, California, or another mutually agreeable location, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The arbitrator's decision is final and binding, but they cannot stay the termination of the agreement, assess punitive damages, or modify any lawful term of the agreement. A judgment may be entered upon the arbitration award by any state or federal court in California or the state within which the Development Area is located. The prevailing party is entitled to recover reasonable attorneys' fees and costs.
Additionally, the document emphasizes that time is of the essence, and failure to perform any obligation within the required time constitutes a material breach of the agreement. All references to time pertain to the time at Black Bear Diner's office in Redding, California. This underscores the importance of adhering to deadlines and fulfilling obligations promptly, as any delay could have significant legal consequences for the franchisee. The franchisee also consents to jurisdiction within the state and judicial district in which Black Bear Diner has its principal place of business for any action brought against Black Bear Diner.