In Hawaii, what does the City Publications disclosure document contain regarding the Franchise Agreement?
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, there are specific amendments for franchisees in Hawaii. The Hawaii Franchise Investment Law provides certain rights to franchisees concerning non-renewal, termination, and transfer of the Franchise Agreement. If any provision in Sections 5B and 19 of the Franchise Agreement is inconsistent with Hawaii law, the Hawaii Franchise Investment Law will take precedence.
Additionally, any requirement in Sections 5B.10 and 20B.2 of the Franchise Agreement for a franchisee to sign a general release as a condition of renewal and transfer must exclude claims arising under the Hawaii Franchise Investment Law. Furthermore, Section 18B.1.h of the Franchise Agreement, which allows for termination upon the franchisee's bankruptcy, may not be enforceable under federal bankruptcy law.
The disclosure also states that the franchise will be filed under the Franchise Investment Law of Hawaii, but this filing does not imply approval or endorsement by the Director of Commerce and Consumer Affairs. The law requires that prospective franchisees receive the disclosure document and all proposed agreements at least seven days before signing any binding agreement or making any payment. The disclosure document is a summary of certain material provisions, and the actual contract should be consulted for all rights, conditions, restrictions, and obligations.