Can a franchisee waive claims under any applicable franchise law, including fraud in the inducement, when signing an agreement with Bhc?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Under California Corporations Code section 31512, these provisions are not enforceable in California for any claims you may have under the California Franchise Investment Law.
-
- 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 (1) waiving any claims under any applicable 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 or any document executed in connections with the franchise.
-
- California's Franchise Investment Law (Corporations Code section 31512 and 31512.1) states that any provision of a franchise agreement or related document requiring the franchisee to waive specific provisions of the law is contrary to public policy and is void and unenforceable. The law also prohibits a franchisor from disclaiming or denying (i) representations it, its employees, or its agents make to you, (ii) your ability to rely on any representations it makes to you, or (iii) any violations of the law.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, certain provisions are not enforceable in California regarding claims under the California Franchise Investment Law. Specifically, no statement or acknowledgment signed by a franchisee can waive claims under any applicable franchise law, including fraud in the inducement. Additionally, franchisees cannot disclaim reliance on statements made by Bhc or its representatives.
This protection is reinforced by California's Franchise Investment Law (Corporations Code section 31512 and 31512.1), which states that any franchise agreement provision requiring a franchisee to waive specific provisions of the law is against public policy and therefore void and unenforceable. The law also prevents Bhc from disclaiming representations made to the franchisee, denying the franchisee's ability to rely on those representations, or disclaiming any violations of the law.
For a prospective Bhc franchisee, this means that the franchise agreement cannot force them to waive their rights to make claims against Bhc under franchise law, especially concerning issues like fraudulent inducement. This ensures that franchisees retain legal recourse if they believe they were misled or defrauded during the franchise sales process. This protection is particularly important in California, given its specific franchise laws.
It is important to note that these protections specifically apply to claims arising under California's Franchise Investment Law. The FDD also indicates that the laws of the state where the franchised BHC Restaurant is located govern issues involving modification of the guarantee while it is in effect, and that the Guarantee and the legal relations among the parties will be governed by and construed in accordance with the laws of the State of California.