Can an All States M.E.D. franchisee waive compliance with the Illinois Franchise Disclosure Act?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
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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- 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. Item 5 of the Disclosure Document is modified to also provide that we defer collection of all initial fees until we have satisfied our pre-opening obligations to you and you have commenced doing business under the Franchise Agreement. Payment of the Development Fee is deferred until the first franchise business opens. The Illinois Attorney General's Office imposed this deferral requirement due to our financial condition.
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, franchisees in Illinois cannot waive compliance with the Illinois Franchise Disclosure Act. The Illinois Addendum to both the Disclosure Document and the Franchise Agreement explicitly states that any provision that attempts to bind a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. This protection ensures that franchisees in Illinois retain all rights and protections afforded to them under Illinois law, regardless of what the franchise agreement might otherwise state.
This provision is particularly important for prospective All States M.E.D. franchisees in Illinois as it prevents the franchisor from enforcing any clause in the franchise agreement that would require the franchisee to give up their legal rights under Illinois franchise law. This includes the right to bring claims under the Illinois Franchise Disclosure Act, including claims of fraud in the inducement, and the right to rely on statements made by the franchisor.
Furthermore, any statement, questionnaire, or acknowledgment signed by the franchisee cannot waive claims under Illinois franchise law or disclaim reliance on the franchisor's statements. This ensures that franchisees are not pressured into unknowingly giving up their rights during the initial stages of the franchise relationship. The Illinois Attorney General's Office also requires All States M.E.D. to defer collection of initial fees until pre-opening obligations are met and the franchisee has commenced business, due to the franchisor's financial condition, providing additional protection for franchisees.