Does California law allow Fitstop to disclaim representations made to a franchisee?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
r franchise. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).
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- California Corporations Code section 31512.1 prohibits a franchisor from disclaiming or denying representations made by the franchisor or its agents to a prospective franchisee or a franchisee's reliance on these representations, or disclaiming violations under the law, in any franchise disclosure document, franchise agreement, or related document. If the Franchise Disclosure Document, Franchise Agreement, or any related document or exhibit contains a provision that is inconsistent with the law, the law will control.
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- California Corporations Code, Section 31125 requires us to give you a disclosure document, approved by the Department of Financial Protection and Innovation before we ask you to consider a material modification of your Franchise Agreement.
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Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, California law impacts the franchisor's ability to disclaim representations made to prospective franchisees. Specifically, California Corporations Code Section 31512.1 prohibits Fitstop from disclaiming or denying representations made by the franchisor or its agents to a prospective franchisee, or denying a franchisee's reliance on such representations. This protection extends to any franchise disclosure document, franchise agreement, or related document. The FDD explicitly states that if any provision within these documents is inconsistent with California law, the law will take precedence.
This means that any promises, assurances, or statements made by Fitstop or its representatives during the franchise sales process can be legally binding, even if the written agreements attempt to disclaim them. Franchisees in California have the right to rely on these representations, and Fitstop cannot deny that these representations were made or that the franchisee relied on them. This protection is designed to prevent franchisors from making misleading or unsubstantiated claims to induce individuals to invest in a franchise, only to later deny those claims based on disclaimer clauses in the franchise agreement.
Furthermore, California's Franchise Investment Law (Corporations Code sections 31512 and 31512.1) reinforces this protection by stating that any provision requiring a franchisee to waive specific provisions of the law is void and unenforceable. This ensures that franchisees cannot inadvertently or unknowingly surrender their rights under the law. The law also prohibits Fitstop from disclaiming or denying representations made to the franchisee, the franchisee's ability to rely on those representations, or any violations of the law.
In practical terms, a prospective Fitstop franchisee in California should carefully document all representations made by Fitstop during the pre-sale process, including verbal promises, marketing materials, and financial projections. These representations can be critical evidence if disputes arise later. The franchisee should also be aware that any clause in the franchise agreement that attempts to disclaim these representations or waive their rights under California law may be unenforceable. This provides a significant layer of protection for franchisees operating in California.