What does the Floors To Go disclosure document contain regarding the franchise agreement?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
R'S STATEMENT MEMBERS**
| Year Ended December 31 | ||
|---|---|---|
| 2022 | ||
| 2023 | 2022 |
EXHIBIT "D"
FLOORS TO GO, LLC
FRANCHISE DISCLOSURE DOCUMENT
Dated March 12, 2025
STATE SPECIFIC ADDENDA TO THE FRANCHISE DISCLOSURE DOCUMENT
Exhibit D-1
CALIFORNIA DISCLOSURE
The California Franchise Investment Law requires that a copy of all proposed agreements relating to the sale of the franchise be delivered together with the Disclosure Document.
In recognition of the requirements of the California Franchise Investment Law, California Corporations Code § 31000 et seq**., the Floors To Go, LLC Disclosure Document for the offer of Floors To Go Showroom franchises for use in California shall be amended as follows:**
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- Our website, www.floorfranchise.com, has not been reviewed or approved by the California Department of Financial Protection and Innovation. Any complaints concerning the content of this website may be directed to the California Department of Financial Protection and Innovation at www.dfpi.ca.gov.
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- The State Cover Page shall be amended by the addition of the following risk factor:
The Membership Agreement contains a provision that requires the member to waive his, her or its right to a jury trial.
Any interest rate charged to a California franchisee shall comply with the California Constitution. The interest rate shall not exceed either (a) 10% annually or (b) 5% annually plus the prevailing interest rate charged to banks by the Federal Reserve Bank of San Francisco, whichever is higher.
The Antitrust Law Section of the Office of the California Attorney General views maximum price agreements as per se violations of the Cartwright Act. Note: maximum price agreements are not per se violations of the Sherman Act.
The registration of this franchise offering by the California Department of Financial Protection and Innovation does not constitute approval, recommendation, or endorsement by the Commissioner.
- Item 3 shall be amended by the addition of the following:
No person or company identified in Items 1 or 2 of this Disclosure Document is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. § 78a et seq., suspending or expelling such persons from membership in such association or exchange.
- Item 17 shall be amended by the addition of the following:
California Business and Professions Code §§20000 through 20043 provides rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the franchise agreement contains a provision that is inconsistent with the law, the law will control.
Exhibit D-1
The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceable under the federal bankruptcy law. (11 U.S.C.A. § 101 et seq.).
The franchise agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
The franchise agreement requires binding arbitration. The arbitration will occur in Lee County, Florida with the costs being borne by the non-prevailing party.
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.
The franchise agreement requires application of the laws of Florida. This provision may not be enforceable under California law.
If you renew or transfer your franchise, you release us from any claims you may have. California Corporations Code §31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code §§31000 through 31516). Business and Professions Code §20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code §§20000 through 20043).
Section 31125 of the California Corporations Code requires us to give you a disclosure document, in a form containing the information that the commissioner may by rule or order require, before a solicitation of a proposed material modification of an existing franchise.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, several exhibits and addenda address specific provisions and legal considerations related to the franchise agreement, particularly concerning state-specific regulations. These disclosures aim to ensure that prospective franchisees are well-informed about their rights and obligations under both the franchise agreement and relevant state laws. For example, California law requires that a copy of all proposed agreements relating to the sale of the franchise be delivered together with the Disclosure Document. The disclosure document also states that the membership agreement contains a provision that requires the member to waive his, her or its right to a jury trial. Any interest rate charged to a California franchisee shall comply with the California Constitution. The interest rate shall not exceed either (a) 10% annually or (b) 5% annually plus the prevailing interest rate charged to banks by the Federal Reserve Bank of San Francisco, whichever is higher. The Antitrust Law Section of the Office of the California Attorney General views maximum price agreements as per se violations of the Cartwright Act.
In Maryland, the FDD includes amendments to comply with the Maryland Franchise Registration and Disclosure Law, specifically regarding Item 17, which covers renewal, termination, transfer, and dispute resolution. A table lists important provisions of the franchise agreement pertaining to assignment and choice of law that may be superseded by Maryland law. Similarly, for Virginia, the document addresses restrictions in Section 13.1-564 of the Virginia Retail Franchising Act, adding statements to Item 17.h to clarify that it is unlawful for Floors To Go to cancel a franchise without reasonable cause or use undue influence to induce a franchisee to surrender their rights. It also states that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law or disclaim reliance on statements made by Floors To Go.
For prospective Floors To Go franchisees, these state-specific addenda are crucial. They highlight how the standard franchise agreement is modified to comply with local laws, which can significantly impact the franchisee's rights and obligations. The disclosures cover a range of issues, including dispute resolution, termination conditions, and waivers of legal rights. Franchisees should carefully review these addenda to understand the full scope of their legal protections and responsibilities in their specific state.
In states such as Hawaii, South Dakota, and Washington, the Floors To Go FDD includes similar statements emphasizing that the disclosure document contains a summary of the franchise agreement's material provisions and that all contracts should be read carefully. These states also mandate that the disclosure document and all proposed agreements be provided to the prospective franchisee at least seven to fourteen days before signing any binding agreement or making any payment. This ensures franchisees have adequate time to review the documents and seek legal counsel if needed, which is a common practice in franchise law to protect franchisee interests.