What are prospective Canine Dimensions franchisees encouraged to do regarding the applicability of California and federal laws to forum selection clauses?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- The franchise agreement requires binding arbitration. The arbitration will occur in Florida with the costs being borne by the franchisee and franchisor. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5 Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California. Business and Professions Code Section 20040.5 relating to forum selection clauses restricting venue outside the state of California or arbitration may be preempted by the Federal Arbitration Act. Section 20040.5 may still apply to any provision relating to judicial proceedings. A binding arbitration provision may not be enforceable under generally applicable contract defenses, such as fraud, duress, or unconscionability.
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions' 2025 Franchise Disclosure Document, prospective franchisees in California are encouraged to seek independent legal counsel to understand how California and federal laws apply to the franchise agreement's venue provisions. Specifically, this relates to provisions that might restrict the location of legal proceedings to a forum outside of California.
The FDD highlights that California Business and Professions Code Section 20040.5, concerning forum selection clauses that restrict venue outside of California, may be affected by the Federal Arbitration Act. While Section 20040.5 might still apply to judicial proceedings, the Federal Arbitration Act could potentially preempt it in other contexts.
Furthermore, the FDD notes that any binding arbitration provision might not be enforceable if standard contract defenses such as fraud, duress, or unconscionability are applicable. Given these complexities and potential conflicts between state and federal laws, Canine Dimensions advises franchisees to consult with their own legal counsel.