What is the effect of the California Franchise Investment Law on the City Publications franchise agreement?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
| FOR THE STATE OF CAL | IFORNIA |
|---|---|
| ---------------------- | --------- |
| Year ending December 31: | ||
|---|---|---|
| 2025 | $ 29,393 | |
| 2026 | 22,613 |
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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 CITY PUBLICATIONS FRANCHISE GROUP, INC. shall be amended as follows:
- The California Franchise Relations Act provides rights to the Franchise concerning termination or nonrenewal of the Franchise Agreement, which may supersede provisions in the Franchise Agreement, specifically Sections 5.B and 19.
- Sections 5B.10 and 20B.2 of the Franchise Agreement require Franchisee to sign a general release as a condition of renewal and transfer of the franchise; such release shall exclude claims arising under California Franchise Investment Law and California Franchise Relations Act.
- Section 17A of the Franchise Agreement contains a covenant not to compete which extends beyond the expiration or termination of the Franchise Agreement; this covenant may not be enforceable under California law.
- Section 18B.1.h of the Franchise Agreement which terminates the Franchise Agreement upon the bankruptcy of the Franchisee may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
- The Franchise Agreement requires litigation to be conducted in a court located in the State 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.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, the California Franchise Investment Law and the California Franchise Relations Act impact the franchise agreement in several ways. The Franchise Agreement is amended to reflect these laws.
Specifically, the California Franchise Relations Act may supersede sections 5.B and 19 of the City Publications Franchise Agreement regarding termination or nonrenewal. Sections 5B.10 and 20B.2, which require a general release from the franchisee upon renewal or transfer, are modified to exclude claims arising under the California Franchise Investment Law and the California Franchise Relations Act, protecting the franchisee's rights to make claims under those laws.
Furthermore, Section 17A's covenant not to compete, which extends beyond the termination of the agreement, may not be enforceable under California law. The agreement's requirement for litigation to occur in Georgia and the application of Georgia laws may also be unenforceable for actions arising under California law. Additionally, Section 19E's liquidated damages clause may be unenforceable under California Civil Code Section 1671. Finally, the enforceability of Section 24G, which mandates binding arbitration in Georgia, may be affected by California and federal laws, and prospective franchisees are encouraged to seek legal counsel regarding venue restrictions.
In addition, no statement signed by a franchisee can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor. The California Franchise Investment Law requires that a copy of all proposed agreements relating to the sale of the franchise be delivered with the disclosure document.