Must an Endless Summer Sweets franchisee comply with all laws and regulations?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 23: RECEIPTS]
Franchisee shall pay all taxes when due.
If Franchisee borrows money, it shall comply with the terms of its loan and make all loan payments when due.
If Franchisee leases the Location, Franchisee shall comply with its lease for the Location and make all rent payments when due.
Franchisee must at all times comply with payment card industry data security standards (PCI-DSS).
The Franchise Agreement provides 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 contains 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.
Other states may require registration, filing, or exemption of a franchise under other laws, such as those that regulate the offer and sale of business opportunities or seller-assisted marketing plans.
If Endless Summer Sweets Franchising, Inc. does not deliver this disclosure document on time or if it contains a false or misleading statement, or a material omission, a violation of federal law and state law may have occurred and should be reported to the Federal Trade Commission, Washington, D.C. 20580 and any applicable state agency (which are listed in Exhibit A).
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to the 2024 Endless Summer Sweets FDD, franchisees are obligated to adhere to various legal and contractual requirements. Franchisees must pay all taxes when due, comply with the terms of any loans they obtain, and adhere to the terms of their location lease, including making rent payments on time.
Endless Summer Sweets franchisees must also comply with payment card industry data security standards (PCI-DSS). The Franchise Agreement can be terminated upon bankruptcy, though this may not be enforceable under federal bankruptcy law. The agreement also includes a covenant not to compete that extends beyond the termination of the franchise, which may not be enforceable under California law, as well as a liquidated damages clause that may be unenforceable under California Civil Code Section 1671.
Furthermore, the FDD indicates that other states may require registration, filing, or exemption of a franchise under laws regulating business opportunities or seller-assisted marketing plans. If Endless Summer Sweets does not provide the disclosure document on time or if it contains false or misleading statements, or a material omission, a violation of federal and state law may have occurred and should be reported to the Federal Trade Commission and any applicable state agency.