Is the termination provision for Cr3 American Exteriors subject to state law?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
The following State Specific Addendum applies to the Tectum Franchising LLC d/b/a CR3 American Exteriors Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain portions of the Franchise Agreement dated and all related agreements.
The provisions of this State Specific Addendum to Franchise Disclosure Document and Franchise Agreement apply only to those persons residing or operating CR3 American Exteriors LLC in the following states: California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, South Dakota, Rhode Island, Virginia, Washington, and Wisconsin.
CALIFORNIA
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 or Agreement contains provisions that are inconsistent with the law, the law will control.
The Franchise 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 contain covenants not to compete which extend beyond the termination of the agreements. These provisions may not be enforceable under California law.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 45–48)
What This Means (2025 FDD)
According to Cr3 American Exteriors' 2025 Franchise Disclosure Document, the franchise agreement's provisions regarding termination, transfer, or non-renewal are subject to state laws, specifically in California. The FDD includes a State Specific Addendum that applies to franchisees residing or operating in certain states, including California.
For California franchisees, the California Business and Professions Code Sections 20000 through 20043 provide specific rights concerning termination, transfer, or non-renewal. If any terms in the Cr3 American Exteriors Franchise Agreement are inconsistent with California law, then California law will take precedence. This ensures that franchisees in California have the protections afforded to them under state law, regardless of what the franchise agreement might state.
Additionally, the FDD notes that certain provisions in the Franchise Agreement, such as those allowing termination upon bankruptcy or those containing non-compete covenants extending beyond the termination of the agreement, may not be enforceable under federal bankruptcy law or California law, respectively. This highlights the importance of franchisees understanding their rights under both the Franchise Agreement and applicable state and federal laws.