For Alloy franchises in Maryland, what happens to other terms in documents executed in connection with the franchise if they are inconsistent with the provision regarding fraud in the inducement?
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 Alloy's 2025 Franchise Disclosure Document, specifically the addendum for Maryland franchisees, any term in any document related to the franchise that is inconsistent with the provision regarding fraud in the inducement will be superseded by the fraud in the inducement provision. This means that if a clause attempts to waive a franchisee's right to claim fraud or disclaim reliance on statements made by Alloy, that clause will not be enforced. The provision protecting against waiving fraud claims takes precedence.
This protection applies to claims of fraud in the inducement, whether based on common law or statutory grounds. It ensures that franchisees are not inadvertently or intentionally led to waive their rights to pursue a fraud claim if they believe they were misled into investing in the Alloy franchise. This is a significant protection for franchisees, as it prevents Alloy from using disclaimers or other contractual language to shield itself from liability for fraudulent statements or omissions.
In practical terms, this means that if an Alloy franchisee in Maryland believes they were induced to invest in the franchise based on false or misleading information provided by Alloy, they can pursue a claim for fraud in the inducement without being barred by other clauses in the franchise agreement or related documents. This provision strengthens the franchisee's position and ensures that Alloy is held accountable for the accuracy and truthfulness of the information it provides to prospective franchisees.