In California, is All County allowed to disclaim representations made to a franchisee?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
CALIFORNIA'S FRANCHISE INVESTMENT LAW (CORPORATION CODE SECTIONS 31512 AND 31512.1) STATES THAT ANY PROVISION OF A FRANCHISE AGREEMENT OR RELATED DOCUMENT REQUIRING THE FRANCHISEE TO WAIVE SPECIFIC PROVISIONS OF THE LAW IS CONTRARY TO PUBLIC POLICY AND IS VOID AND UNENFORCEABLE. THE LAW ALSO PROHIBITS A FRANCHISOR FROM DISCLAIMING OR DENYING (i) REPRESENTATIONS IT, ITS EMPLOYEES, OR ITS AGENTS MAKE TO YOU, (ii) YOUR ABILITY TO RELY ON ANY REPRESENTATIONS IT MAKES TO YOU, OR (iii) ANY VIOLATIONS OF THE LAW.
Item 3.
Item 3 is amended to provide that neither we nor any other person identified in Item 2 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.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, California's Franchise Investment Law protects franchisees from disclaimers regarding representations made by the franchisor. Specifically, All County cannot disclaim or deny representations made to a franchisee, the franchisee's ability to rely on those representations, or any violations of the law. This protection extends to representations made by All County, its employees, or its agents. This means that any attempt by All County to prevent a franchisee from claiming they relied on specific statements or information provided during the franchise sales process is unenforceable under California law. This addendum is for franchises sold in California and is for the purpose of complying with California statutes and regulations.
This provision in the FDD ensures that franchisees in California can hold All County accountable for the claims and promises made during the franchise sales process. It prevents All County from using disclaimers to shield themselves from liability for misrepresentations or omissions that may have induced the franchisee to invest in the franchise. This protection is particularly important in the context of franchise sales, where prospective franchisees often rely heavily on the information provided by the franchisor.
The FDD also states that no disclaimer, questionnaire, clause, or statement signed by a franchisee can waive any claim of fraud in the inducement or disclaim reliance on statements made by All County or its representatives. This further reinforces the protection afforded to franchisees against misleading or false information. This provision supersedes any other term of any document executed in connection with the franchise.
Prospective All County franchisees in California should carefully review the FDD and any related documents to understand their rights and protections under California law. They should also consult with an attorney to ensure that they fully understand the terms of the franchise agreement and the implications of these legal protections.