In states with franchise registration or disclosure laws, can a Bft franchisee waive claims under state franchise law, including fraud in the inducement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
The following provision applies if Developer or the franchise granted hereby are subject to the franchise registration or disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin: No statement, questionnaire, or acknowledgement signed or agreed to by a Developer 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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, in certain states with franchise registration or disclosure laws, a franchisee cannot waive claims under state franchise law, including claims of fraud in the inducement. This protection applies specifically in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin.
This means that any statement, questionnaire, or acknowledgment signed by a Bft franchisee at the start of their franchise relationship cannot waive their right to pursue claims under these states' franchise laws. This includes claims related to being fraudulently induced into signing the franchise agreement, or disclaiming reliance on any statement made by Bft or someone acting on their behalf. This provision is designed to protect franchisees from unknowingly giving up their legal rights.
For prospective Bft franchisees in these states, this is a significant protection. It ensures that they retain the right to take legal action if they believe they were misled or defrauded during the franchise sales process, regardless of any documents they may have signed. This protection supersedes any conflicting terms in the franchise agreement or related documents, reinforcing the franchisee's legal standing under state franchise laws.