What California Code section mandates the disclosure document requirement for Bombs Away?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
California limited liability companies Code, Section 31125 requires the franchisor to give the franchisee a disclosure document, approved by the Department of Financial Protection and Innovation, 14-days prior to the execution of an agreement or the solicitation of a proposed material modification of an existing agreement.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE OFFERING CIRCULAR.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, California Limited Liability Companies Code, Section 31125 mandates that Bombs Away, as the franchisor, must provide a disclosure document to the franchisee 14 days before the execution of an agreement or when soliciting a proposed material modification of an existing agreement. The disclosure document needs to be approved by the Department of Financial Protection and Innovation.
This requirement ensures that prospective Bombs Away franchisees have sufficient time to review the disclosure document before committing to the franchise agreement. The 14-day period allows franchisees to carefully consider the terms and conditions, seek legal counsel, and conduct due diligence.
Additionally, the California addendum states that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Bombs Away or its representatives. This provision protects franchisees from unknowingly giving up their legal rights. The addendum also emphasizes that the California Franchise Investment Law requires that a copy of all proposed agreements relating to the sale of the franchise be delivered together with the offering circular.