What sections of Chapter 80C are relevant to City Publications franchises?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, several sections of the California Franchise Investment Law (Cal. Corp. Code §§31000-31516) and the California Franchise Relations Act (Cal. Bus. and Prof. Code §§20000-20043) are relevant to the franchise agreement. These laws provide rights to franchisees concerning termination or nonrenewal of the franchise agreement, potentially overriding specific sections (5.B and 19) within the City Publications agreement.
Specifically, the FDD notes that the requirement for a franchisee to sign a general release as a condition of renewal and transfer (Sections 5B.10 and 20B.2) will exclude claims arising under California franchise laws. Additionally, a covenant not to compete (Section 17A) that extends beyond the termination of the agreement may not be enforceable under California law. The FDD also indicates that Section 18B.1.h, which allows termination upon franchisee bankruptcy, might not be enforceable under federal bankruptcy law.
Furthermore, the FDD highlights potential issues with the franchise agreement's stipulations regarding litigation venue and governing law. The requirement for litigation to occur in Georgia might not be enforceable for actions arising under California law, and the application of Georgia law itself may also be unenforceable in California. Finally, the FDD points out that Section 19E, which contains a liquidated damages clause, may be unenforceable under California Civil Code Section 1671. Due to Section 24G requiring binding arbitration, prospective franchisees are encouraged to seek legal counsel to determine the applicability of California and federal laws to any provisions of the Franchise Agreement restricting venue to a forum in the State of Georgia.