Does the Chocolate Bash franchise agreement supersede representations made in the franchise disclosure document?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
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- In recognition of the requirements of the California Franchise Investment Law, Cal. Corp. Code §§31000-31516 and the California Franchise Relations Act, Cal. Bus. And Prof. Code §§20000-20043, the Franchise Agreement for Chocolate Bash is amended as follows:
- ¡ The California Franchise Relations Act provides rights to Franchisee concerning termination or non-renewal of the Franchise Agreement, which may supersede provisions in the Franchise Agreement, specifically Sections 3.2 and 14.2.
- ¡ Section 14.2 (c)(iii), which terminates the Franchise Agreement upon the bankruptcy of Franchisee, may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
- ¡ Section 13.2 contains a covenant not to compete that extends beyond the expiration or termination of the Agreement; this covenant may not be enforceable under California Law.
- ¡ Paragraph 1 of this Addendum contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
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- To the extent this Addendum shall be deemed to be inconsistent with any terms or conditions of said Franchise Agreement or exhibits or attachments thereto, the terms of this Addendum shall govern.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the Franchise Agreement for Chocolate Bash is amended in recognition of the requirements of the California Franchise Investment Law and the California Franchise Relations Act. Several sections of the agreement are specifically addressed and potentially superseded by these laws.
Specifically, the California Franchise Relations Act provides rights to the franchisee concerning termination or non-renewal of the Franchise Agreement, which may supersede provisions in Sections 3.2 and 14.2 of the Franchise Agreement. Section 14.2 (c)(iii), which terminates the Franchise Agreement upon the bankruptcy of the franchisee, may not be enforceable under federal bankruptcy law. Additionally, Section 13.2, which contains a covenant not to compete that extends beyond the expiration or termination of the agreement, may not be enforceable under California Law. Finally, Paragraph 1 of the addendum contains a liquidated damages clause that may be unenforceable under California Civil Code Section 1671.
To the extent that the addendum is inconsistent with any terms or conditions of the Franchise Agreement or its exhibits or attachments, the terms of the addendum will govern. This indicates that the addendum, which addresses California-specific laws, takes precedence over the original agreement in cases of conflict for California franchisees.