What disputes related to City Publications are excluded from binding arbitration?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
tate of Georgia. This provision might not be enforceable for any cause of action arising under California law.
- The Franchise Agreement requires application of the laws of the State of Georgia. This provision might not be enforceable under California law.
- Section 19E of the Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
- Section 24G of the Franchise Agreement requires binding arbitration. The arbitration will occur at the forum indicated in Section 24B with the costs being borne by the prevailing party. Prospective franchisees are encouraged to consult 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 in the State of Georgia.
- The Department of Financial Protection and Innovation requires that the franchisor defer the collection of all initial fees from California franchisees until the franchisor has completed all its pre-opening obligations and franchisee is open for business.
- Each provision of this Amendment shall be effective only to the extent that the jurisdictional requirements of the California Investment Law and/or the California Franchise Relations Act are met independent of this Amendment.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the standard franchise agreement requires binding arbitration, but this may not be fully enforceable in certain states due to franchise-specific laws. Specifically, addenda for California, Maryland, and Washington carve out exceptions to the standard binding arbitration clause.
In California, the franchise agreement states that while Section 24G requires binding arbitration, prospective franchisees are encouraged to consult legal counsel to determine the applicability of California and federal laws to any provisions of the Franchise Agreement restricting venue to a forum in the State of Georgia. This implies that California law may provide exceptions or limitations to the binding arbitration requirement, particularly concerning venue.
For Maryland franchisees, the addendum explicitly states that the requirement for litigation or arbitration to be conducted in Georgia shall not limit any rights the franchisee may have under the Maryland Franchise Registration and Disclosure Law to bring suit in the State of Maryland. This means a Maryland franchisee may be able to pursue claims in Maryland courts, even if the standard agreement specifies arbitration in Georgia. Similarly, the Washington addendum specifies that in any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
These state-specific addenda highlight the importance of franchisees understanding their local franchise laws, as they may provide rights and protections that supersede the standard terms of the City Publications franchise agreement. Prospective franchisees should consult with legal counsel to fully understand their rights and obligations in their specific state.