Legal Question in Business Law in California

You say this is written in a contract. If your family agreed to the terms of the contract then yes, it's legal.

What else is in the contract? In order for a contract to be enforceable, there must be consideration. However, the things people can bind themselves to do by contract is almost unlimited. It would be illegal to contract to open a brothel or to sell beer at high school dances, but there is nothing illegal about agreeing to buy back a confiscated telephone for $10 and nothing illegal about agreeing that the $10 is a personal gift to the principal. If you don't agree with the terms of a contract, don't sign it.

As a Franchise Attorney I can only add the following. Don't engage in behavior where they can take your phone and guess what? There will be no payment issues. Doesn't that make the most sense? Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation