Can Alloy deny a franchisee's reliance on the Franchise Disclosure Document?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ne of the states listed in the heading of this Rider (the "Applicable Franchise Registration State") or a non-resident who is acquiring franchise rights permitting the location of one or more ALLOY® businesses in the Applicable Franchise Registration State. B. We and you have contemporaneously herewith entered into a Franchise Agreement (the "Agreement") and/or an Area Development Agreement (if applicable) and wish to amend the Agreement as provided herein. NOW, THEREFORE, for and in consideration of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the FDD and Agreement and Area Development Agreement (if applicable) are hereby amended as follows: 1. The following language is hereby added to the end of the FDD, Agreement and Area Development Agreement (if applicable): "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." 2.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy cannot disclaim a franchisee's reliance on statements made within the FDD, especially concerning fraud claims. For franchisees in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin, Alloy includes a rider stating that no signed statement can waive claims under state franchise law, including fraud, or disclaim reliance on franchisor statements. This provision overrides any conflicting terms in franchise documents.
Specifically, the Illinois Franchise Disclosure Act ensures that franchisees cannot waive compliance with the Act. Any agreement to waive compliance is void. Similarly, Alloy cannot use disclaimers or questionnaires to prevent a franchisee from claiming fraud in the inducement or disclaiming reliance on information provided by Alloy. This protection is crucial for franchisees who base their investment decisions on the information provided by Alloy during the franchise sales process.
For a prospective Alloy franchisee, this means that any attempt by Alloy to deny a franchisee's reliance on the FDD or statements made by Alloy representatives is unenforceable, particularly in states with specific franchise laws like California, Illinois, and Washington. This offers a level of protection to franchisees who may have been misled or defrauded during the franchise sales process, ensuring they can seek legal recourse based on the information provided in the FDD and related communications.