Does the All States M.E.D. FDD prohibit franchisees from making certain claims about the franchise?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
cle 33 of the General Business Law of the State of New York and the regulations issued thereunder shall remain in force; it being the intent of this proviso that the non-waiver provisions of General Business Law Sections 687.4 and 687.5 be satisfied.
- The following language replaces the "Summary" section of Item 17(d), titled "Termination by franchisee":
You may terminate the agreement on any grounds available by law.
- The following is added to the end of the "Summary" sections of Item 17(v), titled "Choice of forum," and Item 17(w), titled "Choice of law":
The foregoing choice of law should not be considered a waiver of any right conferred upon the franchisor or upon the franchisee by Article 33 of the General Business Law of the State of New York.
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- Franchise Questionnaires and Acknowledgements--No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- Receipts--Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earlier of the first personal meeting, ten (10) business days before the execution of the franchise or other agreement, or the payment of any consideration that relates to the franchise relationship.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
Based on the 2024 All States M.E.D. Franchise Disclosure Document, there are some restrictions on the claims a franchisee can make, particularly regarding waivers and disclaimers. Specifically, in North Dakota and New York, franchisees cannot be held to statements that waive claims under state franchise law or disclaim reliance on statements made by the franchisor. This protects franchisees from inadvertently giving up their legal rights or being bound by acknowledgments that contradict the franchisor's representations.
The Minnesota Addendum to the Disclosure Document also addresses prohibited actions by the franchisor. It states that the franchisor cannot require litigation to occur outside of Minnesota, enforce jury trial waivers, or enforce consent to liquidated damages, termination penalties, or judgment notes. Furthermore, the franchisor must protect the franchisee's trademark rights and cannot require a franchisee to agree to a general release.
These stipulations ensure that All States M.E.D. franchisees in certain states retain their legal rights and protections under state laws, preventing the franchisor from imposing unfair or overly restrictive conditions. Prospective franchisees should carefully review these state-specific addenda to understand their rights and how they may differ based on their location.