Can an invalid provision of the Coffee News franchise agreement be modified to make it valid?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 16.6 Exhibits and Schedules. All exhibits and schedules attached hereto are incorporated by reference in the appropriate paragraph and form a part of the Agreement.
- The parties to this Agreement understand and agree Enforceability. 16.7 that, if any portion of the restrictive covenants set forth in this Agreement is held to be unreasonable, arbitrary, or against public policy, then that portion of those covenants shall be considered divisible as to time and region. The parties to this Agreement agree that if any court or competent jurisdiction determines that the specified time period or the specified region of application of any covenant is unreasonable, arbitrary, or against public policy, then a lesser time period, geographical area or both, that is determined to be reasonable, non-arbitrary, and not against public policy, may be enforced against the parties hereto.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, if any part of the restrictive covenants within the agreement is deemed unreasonable, arbitrary, or against public policy, it will be considered divisible concerning time and region. This means that a court with jurisdiction can modify the time period or geographical area of the covenant to make it reasonable, non-arbitrary, and not against public policy, allowing the modified covenant to be enforced.
However, the document explicitly states that while the time period or geographical area can be modified by a court, the payment terms outlined in the agreement are not subject to modification by the court. This ensures that the financial obligations of the franchisee remain as agreed upon, regardless of any adjustments made to other parts of the agreement.
This provision offers a degree of flexibility and protection for both Coffee News and the franchisee. It allows for adjustments to restrictive covenants that might be overly broad or unenforceable, while maintaining the integrity of the financial aspects of the agreement. Prospective franchisees should understand that while some terms can be modified, the payment obligations are firm and will not be altered by a court.