For Chem Dry, is the franchise registration in California currently effective, pending, or exempt?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.
- The following statements are added to Item 17:
California Business & Professions Code Sections 20000 through 20043 provide rights to you 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 may contain a liquidated damages clause.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to the 2024 Chem Dry Franchise Disclosure Document, the franchise agreement contains provisions that may not be enforceable under California law. Specifically, the FDD states that the covenant not to compete, which extends beyond the termination of the franchise, may not be enforceable in California. Additionally, certain liquidated damages clauses within the franchise agreement may be unenforceable under California Civil Code Section 1671. The FDD also notes that the Franchise Agreement requires application of the laws of the State of Tennessee, but this provision may also not be enforceable under California law.
Furthermore, the Chem Dry FDD indicates that if a franchisee transfers their franchise, they are required to sign a general release. However, 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).
While the FDD highlights several areas where California law may override specific terms of the Chem Dry franchise agreement, it does not explicitly state whether Chem Dry's franchise registration in California is currently effective, pending, or exempt. Prospective franchisees in California should consult with legal counsel to understand the full implications of these discrepancies and to determine the current registration status of the Chem Dry franchise in California. They may also want to contact the franchisor directly to confirm the registration status.