Under what conditions can the release language in the Alloy Franchise Agreement relieve the franchisor from liability imposed by Minnesota franchising laws?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- No release language set forth in the Franchise Agreement shall relieve Franchisor or any other person, directly or indirectly, from liability imposed by the laws concerning franchising of the State of Minnesota, provided, that this part will not bar the voluntary settlement of disputes.
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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, specifically the addendum for Minnesota franchisees, the release language within the Franchise Agreement cannot generally relieve Alloy from liability imposed by Minnesota franchising laws. However, there is an exception for the voluntary settlement of disputes. This means that while Alloy cannot use standard release clauses to avoid liability under Minnesota law, both parties are free to reach a mutually agreed-upon settlement to resolve specific disputes.
This provision protects Minnesota franchisees by ensuring that they do not unknowingly or unwillingly waive their rights under state law through standard contract language. It aims to prevent Alloy from using broadly worded releases to circumvent its obligations and responsibilities as defined by Minnesota's franchise regulations.
The exception for voluntary settlements allows for flexibility in resolving conflicts. If a dispute arises, Alloy and the franchisee can negotiate a resolution that both parties find acceptable, and the franchisee can knowingly agree to release Alloy from certain liabilities as part of that settlement. This ensures that any release of liability is the result of a specific, informed decision rather than a blanket waiver.
Furthermore, no disclaimer, questionnaire, clause, or statement signed by a franchisee can waive any claim of fraud in the inducement. This means a franchisee cannot waive their right to claim they were fraudulently convinced to invest in the franchise. This protection extends to reliance on statements or information provided by Alloy or anyone acting on their behalf that was a material inducement to the franchisee's investment.