What is the geographic scope of the Hawaii Franchise Investment Law's applicability to City Publications franchises?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR THE STATE OF HAWAII
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- The Franchise Agreement and Disclosure Document have been amended as follows:
- The Hawaii Franchise Investment Law provides rights to the franchisee concerning non-renewal, termination and transfer of the Franchise Agreement. If the Franchise Agreement, and more specifically, Sections 5B and 19 contain a provision that is inconsistent with the Hawaii Franchise Investment Law, the Hawaii Franchise Investment Law will control.
- 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 the Hawaii Franchise Investment 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.).
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- The Receipt Pages are amended to add the following:
- THIS FRANCHISE WILL BE/HAVE BEEN FILED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF HAWAII. FILING DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS OR A FINDING BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING.
- THE FRANCHISE INVESTMENT LAW MAKES IT UNLAWFUL TO OFFER OR SELL ANY FRANCHISE IN THIS STATE WITHOUT FIRST PROVIDING TO THE PROSPECTIVE FRANCHISEE, OR SUBFRANCHISOR, AT LEAST SEVEN DAYS PRIOR TO THE EXECUTION BY THE PROSPECTIVE FRANCHISEE, OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT LEAST SEVEN DAYS PRIOR TO THE PAYMENT OF ANY CONSIDERATION BY THE FRANCHISEE, OR SUBFRANCHISOR, WHICHEVER OCCURS FIRST, A COPY OF THE DISCLOSURE DOCUMENT, TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE.
- THIS DISCLOSURE DOCUMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT AND THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND THE FRANCHISEE.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the Hawaii Franchise Investment Law applies to City Publications franchises within the state of Hawaii. Specifically, the FDD notes that if any provision in the Franchise Agreement, particularly Sections 5B and 19, conflicts with the Hawaii Franchise Investment Law, the state law will take precedence.
Furthermore, any general release required as a condition of renewal or transfer of the franchise will not apply to claims arising under the Hawaii Franchise Investment Law. The document also clarifies that the termination of the Franchise Agreement due to the franchisee's bankruptcy, as stated in Section 18B.1.h, may not be enforceable under federal bankruptcy law.
The FDD also includes a disclaimer stating that the franchise has been filed under the Franchise Investment Law of Hawaii, but this filing does not imply approval, recommendation, or endorsement by the Director of Commerce and Consumer Affairs. It also highlights the requirement to provide prospective franchisees with the disclosure document and all related agreements at least seven days before signing any binding agreement or making any payment.
In essence, these stipulations ensure that City Publications franchisees in Hawaii are protected by the state's franchise laws, regardless of conflicting terms in the standard franchise agreement. Prospective franchisees should carefully review these amendments and consult with legal counsel to fully understand their rights and obligations under both the franchise agreement and Hawaii state law.