What law governs the relationship between Black Bear Diner and its franchisees in Washington?
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. However, there is a specific exception regarding the enforceability of covenants if the Development Area is outside of California.
Specifically, the FDD states that the agreement is governed by California law, 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. This means that, in general, California law will apply to the agreement, but franchise laws of other states, such as Washington, might apply if their jurisdictional requirements are met without relying on this specific section of the agreement.
However, if the covenants in Section 10 of the agreement (likely dealing with restrictions or obligations) would not be enforceable under California law, and the Development Area is located outside of California (e.g., in Washington), then those specific covenants will be interpreted and construed under the laws of the state where the Development Area is located (i.e., Washington). This ensures that certain key provisions are enforceable even if California law would not allow it.
This clause is important for prospective Black Bear Diner franchisees in Washington because it means that while the overall agreement is likely governed by California law, the enforceability of specific covenants, such as non-compete clauses, could be subject to Washington law if California law is less favorable to the franchisor. Franchisees should consult with legal counsel to understand the implications of this choice of law provision, particularly regarding their rights and obligations under the agreement and how they may be affected by Washington state law.