Does the Alloy franchise agreement allow disclaimers that prevent franchisees from relying on statements made by the franchisor or its representatives?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 Alloy Franchise Disclosure Document, the franchise agreement does not allow disclaimers that prevent franchisees from relying on statements made by Alloy or its representatives. Specifically, the FDD states that no disclaimer, questionnaire, clause, or statement signed by a franchisee can be interpreted as disclaiming reliance on statements or information provided by Alloy, its brokers, or other representatives if that statement was a material inducement to the franchisee's investment. This provision takes precedence over any other conflicting terms in any document related to the franchise agreement. This protection is included in addenda for franchisees in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
This means that Alloy franchisees have the right to rely on the information provided to them by Alloy during the franchise sales process. If a franchisee believes they were misled by Alloy's representations, they are not prevented from pursuing a claim of fraud in the inducement, whether under common law or statutory provisions. This is a significant protection for franchisees, as it ensures that Alloy cannot use disclaimers to shield itself from liability for misrepresentations made to potential franchisees.
It is important to note that while these protections exist, franchisees still have a responsibility to conduct their own due diligence and independent investigation of the Alloy franchise opportunity. The FDD includes a questionnaire where prospective franchisees acknowledge whether they have conducted such an investigation and understand the risks involved in operating an Alloy franchise. However, these acknowledgments do not waive the franchisee's right to rely on Alloy's representations or pursue a claim of fraud if those representations prove to be false or misleading.