Does the Card My Yard franchise agreement require disputes to be settled through binding arbitration?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
ument contains a covenant not to compete which extends beyond the termination of the franchise agreement. This provision may not be enforceable under California law.
-
- The franchise agreement attached to this disclosure document contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
-
- The franchise agreement attached to this disclosure document does not require disputes to be settled through binding arbitration.
-
- The franchise agreement attached to this disclosure document requires disputes to be settled in Utah under Utah law. Prospective franchisees are encourage 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 the franchise agreement restricting venue to a forum outside the State of California.
-
- The franchise agreement attached to this disclosure document requires application of the laws of Utah. This provision may not be enforceable under California law.
-
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to the 2025 Card My Yard Franchise Disclosure Document, the franchise agreement does not require disputes to be settled through binding arbitration. However, the document does state that the franchise agreement requires disputes to be settled in Utah under Utah law.
Prospective franchisees, particularly those in California, are encouraged to seek legal counsel to understand how California and federal laws might apply to the franchise agreement, especially regarding venue restrictions that require disputes to be resolved outside of California. Specifically, California Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act should be reviewed.
The FDD also notes that California Corporations Code §31512 voids any waiver of rights under the Franchise Investment Law (California Corporations Code §§31000 through 31516), and Business and Professions Code §20010 voids any waiver of rights under the Franchise Relations Act (Business and Professions Code §§20000 through 20043). Additionally, if a franchisee renews or transfers their franchise, they must sign a general release.