Who does the release agreement in the Alloy FDD benefit?

According to the 2025 Alloy Franchise Disclosure Document, certain representations requiring prospective franchisees to agree to a release, estoppel, or waiver of liability do not act as a release, estoppel, or waiver of liability under specific state franchise laws. This applies to the California Franchise Investment Law, Maryland Franchise Registration and Disclosure Law, the Illinois Franchise Disclosure Act, and the Franchise Investment Protection Act of Washington. Additionally, the general release outlined in Exhibit I of the Alloy Disclosure Document does not apply to claims arising under the Washington Franchise Investment Protection Act.

In practical terms, this means that while Alloy may present documents that appear to limit their liability, these limitations are not enforceable under the franchise laws of California, Maryland, Illinois, and Washington. Franchisees in these states retain their rights to pursue claims against Alloy under these specific state laws, regardless of any release, estoppel, or waiver they may have signed. This provides an added layer of protection for franchisees in these states, ensuring they are not unduly restricted from seeking legal recourse if they believe Alloy has violated franchise laws.

This type of provision is relatively common in franchise agreements to comply with varying state laws. Franchise agreements often contain broad release clauses, but state addenda, like the one described, carve out exceptions to ensure compliance with local regulations. Prospective Alloy franchisees should carefully review the state addenda applicable to their location to understand the specific protections afforded to them under state law. They should also consult with a legal professional to fully understand their rights and obligations under the franchise agreement and applicable state laws.