Does the City Publications franchise agreement require arbitration or litigation to be conducted outside of the franchisee's state?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
ns 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.
- 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. 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. 3.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, the franchise agreement generally requires litigation to occur in Georgia, which may be outside the franchisee's state. Specifically, Section 18B.1.h of the Franchise Agreement states that the agreement terminates upon the bankruptcy of the franchisee, but this may not be enforceable under federal bankruptcy law. Section 24G requires binding arbitration at the forum indicated in Section 24B, with costs borne by the prevailing party. However, these provisions may not be enforceable under California law for franchisees in that state. Prospective franchisees are encouraged to seek legal counsel to determine the applicability of California and federal laws regarding venue restrictions to Georgia.
For franchisees in Maryland, Sections 24B and 24G of the City Publications Franchise Agreement initially require litigation or arbitration to be conducted in Georgia. However, this requirement does not limit any rights the franchisee may have under the Maryland Franchise Registration and Disclosure Law to bring suit in Maryland. This means that while the standard agreement specifies Georgia as the venue, Maryland franchisees retain the right to pursue legal action within their own state under certain circumstances.
For franchisees in Washington, 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.
For franchisees in Rhode Island, Sections 24A and 24B of the City Publications Franchise Agreement are amended to state that restricting jurisdiction or venue to a forum outside the state of Rhode Island or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under The Rhode Island Franchise Investment Act. This ensures that Rhode Island franchisees are not forced to litigate or arbitrate outside of their state for claims arising under the Rhode Island Franchise Investment Act.