How might RCW 19.100.180 affect the City Wide franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 17 is amended by the addition of the following language to the original language:
The following language is added as a second section before the chart/columns.
THE FRANCHISE AGREEMENT REQUIRES FRANCHISEE TO EXECUTE A GENERAL RELEASE OF CLAIMS UPON RENEWAL OR TRANSFER OF THE FRANCHISE AGREEMENT. CALIFORNIA CORPORATIONS CODE SECTION 31512 PROVIDES THAT ANY CONDITION, STIPULATION OR PROVISION PURPORTING TO BIND ANY PERSON ACQUIRING ANY FRANCHISE TO WAIVE COMPLIANCE WITH ANY PROVISION OF THAT LAW OR ANY RULE OR ORDER THEREUNDER IS VOID.
California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination, transfer, or non-renewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, the law will control.
The Franchise Agreement and the Development Agreement provide for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
The Franchise Agreement and the Development Agreement contain a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the franchise agreement requires franchisees to execute a general release of claims upon renewal or transfer of the franchise agreement. However, California Corporations Code Section 31512 states that any condition, stipulation, or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of that law or any rule or order thereunder is void. This means that if the general release of claims required by City Wide is inconsistent with California law, the law will take precedence. This could impact the enforceability of the release in California.
Additionally, California Business and Professions Code Sections 20000 through 20043 provide rights to franchisees concerning termination, transfer, or non-renewal of a franchise. If any provision in the City Wide Franchise Agreement is inconsistent with these sections of the California Business and Professions Code, the law will control. This ensures that franchisees in California retain the rights granted to them under California law, regardless of what the franchise agreement might state.
Furthermore, the City Wide Franchise Agreement and the Development Agreement provide for termination upon bankruptcy, but this provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.). The Franchise Agreement and the Development Agreement also contain a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law. Finally, the Franchise Agreement contains a liquidated damages clause, but under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable. These stipulations highlight areas where California or federal law may override specific terms in the City Wide franchise agreement, potentially altering the rights and obligations of the franchisee.