Does Item 17 provide a comprehensive overview of all aspects of the Gokhale Method franchise relationship?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
ELATIONSHIP
This table lists certain important provisions of the Franchise and related Agreements. You should read these provisions in the agreements attached to this Franchise Disclosure Document.
| PROVISION | SECTIONIN FRANCHISE AGREEMENT | SUMMARY | |
|---|---|---|---|
| a.Lengthofthefranchiseterm | Section3.1 | Thetermisfive(5)years. | |
| b.Renewalorextension | Section3.2 | You may have the right to renew for consecutive terms of five (5) years subjecttocertainconditions(e.g.,thatyousign anewformoffranchiseagreement). | |
| c.Requirementsforfranchiseeto reneworextend | Section3.2 | You must give written notice of your decision to renew no fewer thanthreemonthsnormorethan12monthspriortothe end of the then-current term. You mayalsohavetoexecutea general release in our favor and signanewformoffranchise agreement. | |
| d.Terminationbyfranchisee | None | ||
| e.Terminationbyfranchisorwithout | None | ||
| cause | |||
| f.Terminationbyfranchisorwith cause | Section15 | We may terminate for cause. Depending on the reason for termination, we may not provide you an opportunity tocure. Seethisitem17(g)and(h)forfurtherdescription. | |
| g.“Cause”defined–curabledefaults | Section15.3 | You have 30 days to cure any default not enumerated in Section15.1andSection15.2. | |
| h.“Cause”defined–non-curable defaults | Section15.1and Section15.2 | We may terminate the Franchise Agreement without providing you an opportunity to cure for any of the deficiencies identified in Sections 15.1 or 15.2 of the FranchiseAgreement. | |
| i.Franchisee’sobligationson termination/non-renewal | Section16 | Cease operations, cease use of confidential information and trademarks, assign your lease to us (at our option), pay all sums owed tousandouraffiliates,payliquidateddamagesto us, if applicable, return manuals and confidential information, sell us your equipment (at our option), and complywithcovenantsnottocompete. | |
| j.Assignmentortransferofcontract | Section14.1 | There isnorestrictiononourrighttoassignortransferunless | |
| byfranchisor | requiredbylaw. | ||
| k.Transferbyfranchisee | Section14.2 | Youhavenorighttotransfer. | |
| l.Franchisorapprovaloftransferby franchisee | Section14.2 | If applicable law requires that we allow you to transfer the franchise agreement, we have the right to impose requirements upon the transfer, including requiring a payment of a transfer fee of $5,000 and our attorneys’ fees, |
| m.Conditionsforfranchisorapproval | Section14.2 | We have the right to impose conditions on thetransfertothe | |
|---|---|---|---|
| oftransfer | extentwehavetopermittransferunderstatelaw. | ||
| n.Franchisor’srightoffirstrefusalto | None | ||
| acquirefranchisee’sbusiness | |||
| o.Franchisor’soptiontopurchase | None | ||
| franchisee’sbusiness | |||
| p.Deathorincompetenceof | Section14.2 | The franchise agreement cannot be transferred upondeathor | |
| franchisee | incompetence. | ||
| q.Non-competitioncovenantsduring thetermofthefranchise | Section17.1 | You cannot: divert or attempt to divert any present or prospective customer; employ or seek to employ any person employed by us, our affiliates, or any of our franchisees; be involvedinanyCompetitiveBusiness. | |
| r.Non-competitioncovenantsafter thefranchiseisterminatedorexpires | Section17.2 | You cannot be involved for a period of two (2) years in any business that iscompetitivewithourswithina10-mileradius of your former location or of any location then existing wheretheGokhaleSystemistaught. | |
| s.Modificationofagreement | Section22and Section8.10 | No amendments to the franchise agreement may be made unless the agreement allows us to unilaterally change something or unless the change is mutually agreed to by the parties and executed in writing. Also, we may change the Systemfromtimetotime. | |
| t.Integration/mergerclause | Section22 | Only the terms of the franchise agreement are binding (subjecttostatelaw). | |
| u.Disputeresolutionbyarbitrationor mediation | Section24 | Except for certain claims, all disputes are subject to mediation, and if mediation does not resolve a dispute, it shallberesolvedinarbitrationinPaloAlto,California. | |
| v.Choiceofforum | Section24 | Arbitration must be in Palo Alto, California and any claims not subject to arbitration shall be brought only inthestateor federalcourtsforPaloAlto,California. | |
| w.Choiceoflaw | Section24 | California law shall apply, except that the California Franchise Relations Act and the California Franchise Investment Law, nor any portions thereof, shall apply unless you satisfy the requirementsforapplicationofsuchlawapart from the choice of law provision. AND EXCEPT THAT LAWS OF STATE IN WHICH YOUR FRANCHISE IS LOCATED SHALL GOVERN WITH RESPECT TO SECTION17ANDITSENFORCEMENT | A provision in the Franchise Agreement, which states that the Agreement terminates upon your bankruptcy may not be enforceable under Title 11, USC Section 101. |
APPLICABLE STATE LAW MAY REQUIRE ADDITIONAL DISCLOSURES RELATED TO THE INFORMATION IN THIS DISCLOSURE DOCUMENT. THESE ADDITIONAL DISCLOSURES, IF ANY, APPEAR IN AN ADDENDUM.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 27–29)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, Item 17 provides a summary of key provisions within the franchise agreement related to renewal, termination, transfer, and dispute resolution. The document explicitly states that the provided table lists "certain important provisions" and directs potential franchisees to read the full agreements attached to the FDD for complete details. This indicates that while Item 17 offers an overview, it is not exhaustive and further examination of the franchise agreement is necessary.
Item 17 outlines the length of the franchise term, renewal conditions, and the requirements for franchisees to renew or extend their agreements. For instance, the initial term is five years, with potential for consecutive five-year renewals if certain conditions are met, such as providing written notice between three and twelve months before the current term expires and signing a new franchise agreement. The document also details the conditions under which Gokhale Method can terminate the franchise agreement with or without cause, specifying curable and non-curable defaults.
Furthermore, Item 17 addresses the franchisee's obligations upon termination or non-renewal, including ceasing operations, discontinuing the use of confidential information and trademarks, and complying with non-compete covenants. During the franchise term, franchisees are restricted from activities such as diverting customers or employing individuals associated with Gokhale Method or its franchisees. Post-termination, a franchisee cannot be involved in a competitive business within a 10-mile radius of their former location or any existing Gokhale Method location for two years.
Regarding transferability, the FDD states that franchisees generally do not have the right to transfer their franchise. However, if applicable law mandates that Gokhale Method allow a transfer, they reserve the right to impose conditions, including a $5,000 transfer fee and coverage of their attorney's fees. The document also specifies that the franchise agreement cannot be transferred upon the death or incompetence of the franchisee. Finally, dispute resolution typically involves mediation followed by arbitration in Palo Alto, California, with California law governing the agreement, except for specific provisions related to termination enforcement, which are governed by the laws of the state where the franchise is located.