Can an All States M.E.D. franchisee disclaim reliance on statements made by the franchisor in connection with the franchise relationship?
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.
-
- 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.
-
- 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.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the ability of a franchisee to disclaim reliance on statements made by the franchisor, franchise seller, or other persons acting on behalf of the franchisor is restricted, particularly in certain states. Specifically, in New York, Illinois, and North Dakota, any statement, questionnaire, or acknowledgment signed by a franchisee cannot waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor or its representatives. This provision overrides any conflicting terms in other documents related to the franchise agreement.
This means that All States M.E.D. franchisees in these states retain the right to pursue claims based on misrepresentations or fraudulent statements made during the franchise sales process, regardless of any disclaimers they may have signed. This protection is particularly important as it prevents franchisees from unknowingly giving up their legal rights. The FDD emphasizes that this protection supersedes any other term of any document executed in connection with the franchise.
For prospective All States M.E.D. franchisees, this information highlights the importance of carefully reviewing all documents and statements made by the franchisor during the sales process. While the franchise agreement may contain standard disclaimers, these may not be enforceable in certain states like New York, Illinois, and North Dakota, offering franchisees some recourse if they believe they were misled. It is advisable for potential franchisees to consult with legal counsel to fully understand their rights and protections under applicable state laws.