In California, what specific rights do franchisees have concerning transfer of a Buona franchise under California Business and Professions Code Sections 20000 through 20043?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
ou are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
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- Item 6 of the Franchise Disclosure Document on "Other Fees" is amended by the addition of the following:
- The maximum annual interest rate in California is 10%.
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- Item 17 of the Franchise Disclosure Document on "Renewal, Termination, Transfer and Dispute Resolution" is amended by the addition of the following:
California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer, or nonrenewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, the law will control.
The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under
federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
The Franchise Agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law."
The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
The Franchise Agreement requires binding arbitration.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, California Business and Professions Code Sections 20000 through 20043 provide specific rights to Buona franchisees regarding the transfer of a franchise. The FDD states that if any provision within the franchise agreement is inconsistent with California law, the law will take precedence. This ensures that California franchisees are protected by the state's franchise laws, regardless of what the franchise agreement might state.
Buona's franchise agreement stipulates that franchisees must sign a general release when transferring their franchise. However, California Corporations Code § 31512 voids any waiver of a franchisee's rights under the Franchise Investment Law (California Corporations Code §§ 31000 – 31516), and Business and Professional Code § 20010 voids any waiver of a franchisee's rights under the Franchise Relations Act (Business and Professionals Code §§ 20000 – 20043). This means that a Buona franchisee in California cannot waive their rights under these laws, even if the franchise agreement attempts to require it.
Furthermore, the Buona addendum to the franchise agreement for California franchisees reinforces that California Business and Professions Code Sections 20000 through 20043 provide rights concerning termination, transfer, or nonrenewal, and that California law will control if there are inconsistencies. This addendum serves to clarify and emphasize the protections afforded to California franchisees under state law, ensuring that the franchise agreement is interpreted in a manner that is consistent with California's legal framework.