Is Gokhale Method allowed to deny violations of the law in California?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
The California Department of Financial Protection and Innovation requires that certain provisions contained in franchise documents be amended to be consistent with California law, including the California Franchise Investment Law, CAL.
CORP.
CODE Section 3100 et seq., and the California Franchise Relations Act, CAL.
BUS.
PROF.
CODE Section 20000 et seq.
To the extent that the disclosure document and/or Franchise Agreement contain provisions that are inconsistent with the following, such provisions are hereby amended:
- A.
Item 17 of the disclosure document is supplemented by the following language:
- a.
California Business and Professions Code Sections 20000 through 20043 provide 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.
- b.
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.).
- c.
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.
- d.
The Franchise Agreement contains a liquidated damages clause.
Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, California law takes precedence over any conflicting terms in the franchise agreement. Specifically, the FDD states that if any provision within the Gokhale Method franchise agreement is inconsistent with California law, then the law will govern. This ensures that franchisees operating in California are protected by the state's franchise laws, regardless of what the franchise agreement might state.
This protection extends to various aspects of the franchise relationship, including termination, transfer, and non-renewal rights, as provided under California Business and Professions Code Sections 20000 through 20043. Furthermore, certain clauses within the agreement, such as those pertaining to non-compete covenants extending beyond the franchise term or liquidated damages, may not be enforceable under California law. The FDD highlights that federal bankruptcy law may also supersede termination provisions related to bankruptcy.
For a prospective Gokhale Method franchisee in California, this addendum offers significant reassurance. It means that the franchisee's rights are safeguarded by California law, even if the franchise agreement contains conflicting language. This is particularly important in areas like termination and non-renewal, where franchisors might otherwise exert more control. Franchisees should carefully review the franchise agreement alongside these state-specific amendments to fully understand their rights and obligations under California law.
It is common practice for franchise agreements to be subject to state-specific addenda to ensure compliance with local laws. This amendment reflects Gokhale Method's adherence to California's regulatory requirements, providing a level of security and legal clarity for franchisees operating within the state.