Is the provision in the Boulder Designs Franchise Agreement requiring the application of Texas laws always enforceable under California law?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
aterial modification of an existing franchise.
The Franchise Agreement requires the application of the laws of Texas. This provision may be unenforceable under California law.
You must sign a general release if you renew or transfer your franchise. California Corporations Code Section 31512 voids a prospective waiver of your rights under the Franchise Relations Act (Business and Professions Code Section 20000 – 20043).
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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 behalf of the Franchisor.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–44)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, the Franchise Agreement stipulates that Texas law governs the agreement. However, this provision may not always be enforceable under California law. This means that while the agreement is written to be interpreted under Texas law, a California court might apply California law instead, especially if the Texas law conflicts with California statutes designed to protect franchisees.
Several specific clauses in the Boulder Designs Franchise Agreement are highlighted as potentially unenforceable in California. These include the covenant not to compete extending beyond the termination of the franchise, certain liquidated damages clauses, and requirements for a general release upon renewal or transfer. California law, specifically the California Corporations Code and Business and Professions Code, includes provisions that protect franchisees' rights regarding these issues, and these protections may override the terms of the Franchise Agreement.
For a prospective Boulder Designs franchisee in California, this means that certain aspects of the Franchise Agreement could be interpreted differently than written, potentially offering more protection than initially appears. It is crucial for franchisees to be aware of California-specific franchise laws and to consult with legal counsel to understand their rights and obligations under both the Franchise Agreement and California law. This ensures that franchisees can navigate their business relationship with Boulder Designs effectively and protect their interests.