In Hawaii, what is the relationship between the Franchise Agreement and the Hawaii Franchise Investment Law regarding the City Publications franchise?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR THE STATE OF HAWAII
-
- 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.).
-
- 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 takes precedence over the Franchise Agreement in certain situations. Specifically, if any provision in Sections 5B and 19 of the Franchise Agreement is inconsistent with the Hawaii Franchise Investment Law, the state law will govern. This ensures that franchisees in Hawaii are protected by the rights and regulations established by the state.
Furthermore, any general release that City Publications requires a franchisee to sign as a condition of renewal or transfer of the franchise must exclude claims arising under the Hawaii Franchise Investment Law. This means a franchisee cannot waive their rights under Hawaii law as a condition of renewing or transferring their franchise. Additionally, the FDD states that the termination of the Franchise Agreement due to the franchisee's bankruptcy, as outlined in Section 18B.1.h, may not be enforceable under federal bankruptcy law.
The FDD also includes specific disclaimers required by Hawaii law. It states that the franchise filing does not constitute approval, recommendation, or endorsement by the Director of Commerce and Consumer Affairs, nor does it indicate that the information provided is accurate or complete. The document also reiterates the law that a prospective franchisee must receive the disclosure document and all proposed agreements at least seven days before signing any binding agreement or paying any consideration.
These stipulations ensure that prospective City Publications franchisees in Hawaii are aware of their rights and protections under state law, and that the Franchise Agreement adheres to the legal requirements set forth by the Hawaii Franchise Investment Law. The disclosure document serves as a summary, and franchisees are encouraged to review the complete contract for all rights, conditions, restrictions, and obligations.