Under what conditions are liquidated damages clauses in the Dryject franchise agreement unenforceable in California?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
The franchise agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
Prospective franchisees are encouraged to consult private 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 a franchise agreement restricting venue to a forum outside the State of California.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, the enforceability of liquidated damages clauses within the franchise agreement is subject to California Civil Code Section 1671. This section stipulates that certain liquidated damages clauses may be deemed unenforceable under California law.
For a prospective Dryject franchisee in California, this means that if the franchise agreement contains a liquidated damages clause, its enforceability will be determined by California Civil Code Section 1671. It is important to understand the specific conditions under which such clauses are deemed unenforceable in California, as this could significantly impact the financial implications of terminating the franchise agreement.
Dryject encourages prospective franchisees to seek legal counsel to fully understand the implications of California and federal laws on the franchise agreement. Given the complexities of franchise law and the potential for unenforceability of certain clauses, consulting with an attorney is a prudent step for anyone considering investing in a Dryject franchise in California.