For Bonchon franchises sold in California, what is prohibited in exchange for assistance related to a declared state or federal emergency?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- The Franchise Agreement and Area Development Agreement contain a provision requiring you to waive your right to punitive or exemplary damages against the franchisor or any of its representatives, limiting your recovery to actual damages. Under California Corporations Code section 31512, these provisions are not enforceable in California for any claims you may have under the California Franchise Investment Law.
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- California's Franchise Investment Law (Corporations Code sections 31512 and 31512.1) states that any provision of a franchise agreement or related document requiring the franchisee to waive specific provisions of the law is contrary to public policy and is void and unenforceable. The law also prohibits a franchisor from disclaiming or denying (i) representations it, its employees, or its agents make to you, (ii) your ability to rely on any representations it makes to you, or (iii) any violations of the law.
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- No statement, questionnaire, or acknowledgement 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.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, California law protects franchisees from waiving certain rights, specifically regarding claims under the California Franchise Investment Law.
The FDD states that under California Corporations Code section 31512, any provision in the Franchise Agreement that requires a franchisee to waive their right to punitive or exemplary damages against Bonchon or its representatives is not enforceable in California. This means Bonchon franchisees in California cannot be forced to waive their rights to seek punitive damages, which are intended to punish the franchisor for misconduct, or exemplary damages, which are similar in purpose. The franchisee's recovery is limited to actual damages.
Furthermore, California's Franchise Investment Law (Corporations Code sections 31512 and 31512.1) voids any provision requiring a franchisee to waive specific provisions of the law, deeming such waivers contrary to public policy and unenforceable. Bonchon is also prohibited from disclaiming or denying representations made to the franchisee, the franchisee's ability to rely on those representations, or any violations of the law.
The FDD also clarifies that no statement, questionnaire, or acknowledgement signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Bonchon or its representatives. This provision supersedes any other conflicting term in any document related to the franchise agreement, ensuring franchisees retain their legal rights and protections under California law.