What happens if a provision of the Crown Gold Exchange General Release is held invalid?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Crown Gold Franchising. Franchisee agrees that the existence of any claim it may have against Crown Gold Franchising shall not constitute a defense to the enforcement by Crown Gold Franchising of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the Crown Gold Exchange franchise agreement includes provisions addressing the potential unenforceability of certain covenants. Specifically, this relates to covenants within the agreement, such as those pertaining to non-competition. If a court or arbitrator deems any part of these covenants unenforceable or unreasonable, the intention is for the court or arbitrator to modify the restriction. This modification should be to the extent reasonably necessary to protect the legitimate business interests of Crown Gold Franchising.
This clause ensures that even if a specific restriction is found to be too broad or otherwise invalid, the remaining provisions are interpreted and adjusted to still provide some level of protection for Crown Gold Exchange's business interests. This approach is fairly common in franchise agreements, as it seeks to balance the franchisee's rights with the franchisor's need to safeguard its brand and business model.
For a prospective Crown Gold Exchange franchisee, this means that non-compete and other restrictive covenants are not necessarily all-or-nothing. If a particular aspect seems overly restrictive, there is a mechanism for a court or arbitrator to adjust it. However, the underlying principle is to still protect Crown Gold Exchange's interests, so franchisees should expect some form of restriction to remain in place. Franchisees should seek legal counsel to fully understand the implications of these clauses and how they might be applied in specific situations.