Does the Alloy franchise agreement's jury waiver apply to allegations of fraud or misrepresentation?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The Franchise Agreement contains a waiver of punitive damages and jury trial provision. These provisions may not be enforceable under California law.
- 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."
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- 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 Alloy's 2025 Franchise Disclosure Document, the franchise agreement contains a jury trial waiver provision. However, its enforceability may be limited under California law. Specifically, the California Addendum to the Franchise Disclosure Document states that no statement or acknowledgment signed by a franchisee can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by the franchisor. This provision supersedes any other conflicting term in any document related to the franchise.
For prospective Alloy franchisees in California, this means that while the franchise agreement may include a jury trial waiver, this waiver might not be enforceable when it comes to claims of fraud or misrepresentation. The California addendum ensures that franchisees retain their rights to pursue such claims, potentially including a jury trial, despite any waiver language in the main agreement. This protection is particularly important as it prevents Alloy from using the waiver to shield itself from liability for fraudulent statements or actions that induced the franchisee to invest.
Furthermore, the Maryland Addendum provides additional clarity regarding waivers and liabilities related to franchise law violations. It states that no disclaimer, questionnaire, clause, or statement signed by a franchisee will waive any claim of fraud in the inducement, whether common law or statutory. This also ensures that franchisees cannot disclaim reliance on statements made by Alloy or its representatives that were a material inducement to the franchisee's investment. This provision supersedes any other inconsistent term in any document executed in connection with the franchise.
In summary, while Alloy's standard franchise agreement may contain a jury trial waiver, the state-specific addenda for California and Maryland provide important protections for franchisees. These addenda clarify that such waivers do not apply to claims of fraud or misrepresentation, ensuring that franchisees retain their legal rights to address potential misconduct by Alloy.