What is the significance of the California addendum to the Gokhale Method Franchise Disclosure Document?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
ADDENDUM TO THE GOKHALE METHOD INSTITUTE, INC. FRANCHISE DISCLOSURE DOCUMENT FOR THE STATE OF CALIFORNIA
REGISTRATION OF THIS FRANCHISE DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE COMMISSIONER OF THE DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION.
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.
- e.
The Franchise Agreement requires the parties to try to settle disputes in mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Procedures.
If not resolved by mediation, the Franchise Agreement requires binding arbitration.
The arbitration will occur at Palo Alto, California with the costs being borne by the parties equally.
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.
- f.
The franchise agreement requires application of the laws of California except that the laws of the state in which Franchisee is located governs any covenants not to compete.
Our website is www.gokhalemethod.com.
OUR WEBSITE 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.dfi.ca.gov.
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATED TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH A COPY OF THE DISCLOSURE DOCUMENT.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, the addendum for California is required by the California Department of Financial Protection and Innovation to ensure that the franchise documents comply with California law, specifically the California Franchise Investment Law and the California Franchise Relations Act.
The addendum modifies certain provisions in the Gokhale Method's standard franchise agreement to align with California law. For example, the addendum clarifies franchisee rights regarding termination, transfer, or non-renewal, as provided by California Business and Professions Code Sections 20000 through 20043. It also addresses the enforceability of clauses related to termination upon bankruptcy, covenants not to compete extending beyond the franchise term, and liquidated damages, noting that California law may override certain provisions in the standard agreement.
Additionally, the addendum specifies that while the Gokhale Method franchise agreement requires mediation and binding arbitration in Palo Alto, California, with costs shared equally, prospective franchisees should seek legal counsel to understand how California and federal laws apply to venue restrictions. The addendum also states that California law, except for laws concerning covenants not to compete, governs the franchise agreement. Finally, the addendum emphasizes that a copy of all proposed agreements must be delivered with the disclosure document, and the California Department of Financial Protection and Innovation has not reviewed or approved the Gokhale Method website.