For All States M.E.D., can a franchisee waive claims under state franchise law?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
Y THE FRANCHISEE, OR SUBFRANCHISOR, WHICHEVER OCCURS FIRST, A COPY OF THE DISCLOSURE DOCUMENT, TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE.
THIS DISCLOSURE DOCUMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND THE FRANCHISEE.
Registered agent in the state authorized to receive service of process:
Commissioner of Securities of the State of Hawaii Department of Commerce and Consumer Affairs Business Registration Division Securities Compliance Branch 335 Merchant Street, Room 203 Honolulu, HI 96813
ILLINOIS ADDENDUM TO THE DISCLOSURE DOCUMENT
As to franchises governed by the Illinois Franchise Disclosure Act, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
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- Item 17.w. is modified to provide that Illinois law applies.
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- In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
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- In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation, or provision of the Franchise Agreement purporting to bind you to waive compliance with any provision of the Illinois Franchise Disclosure Act or any other law of the State of Illinois is void.
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- The conditions under which your Franchise Agreement can be terminated and your rights upon nonrenewal may be affected by Sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- 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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- Initial Fee Deferral.
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 franchise agreement includes provisions that address the waiver of claims under state franchise law, particularly in addenda for specific states like Illinois, North Dakota, and Rhode Island. For instance, in Illinois, any provision that requires a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. Similarly, no statement or acknowledgment signed by a franchisee can waive claims under any applicable state franchise law, including fraud in the inducement. This protection extends to disclaiming reliance on statements made by All States M.E.D. or its representatives. These stipulations are designed to protect franchisees from inadvertently relinquishing their legal rights under state laws.
In North Dakota, certain waivers are explicitly addressed. Any waiver of a trial by jury or punitive damages will not apply to North Dakota franchisees. Additionally, any requirement for a franchisee to sign a general release upon renewal of the franchise agreement is not applicable under North Dakota law. These provisions ensure that franchisees in North Dakota retain their rights to a jury trial, punitive damages, and are not compelled to sign general releases that could limit their legal recourse.
For Rhode Island, the franchise agreement cannot restrict a franchisee's choice of jurisdiction or venue, as prohibited by the Rhode Island Franchise Investment Act. This means that any attempt by All States M.E.D. to enforce such restrictions would be void in Rhode Island. These state-specific addenda highlight the importance of franchisees understanding the specific legal protections afforded to them based on their location, as the standard franchise agreement may be superseded by these state laws. Prospective franchisees should carefully review the addenda applicable to their state and consult with legal counsel to fully understand their rights and obligations.