For Carls franchisees in Applicable Franchise Registration States, can a franchisee disclaim reliance on statements made by the franchisor?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
The following language is hereby added to the Franchise Disclosure Document if you are a resident of one of the states listed in the heading of this Rider (the "Applicable Franchise Registration State") or a non-resident who is acquiring franchise rights permitting the location of one or more Carl's Jr. Restaurants in the Applicable Franchise Registration State:
"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 (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 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 Carls FDD, franchisees in Applicable Franchise Registration States cannot disclaim reliance on statements made by Carls or its representatives. This protection applies to residents of California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin, as well as non-residents acquiring franchise rights in those states.
This provision means that any statement, questionnaire, or acknowledgment signed by a Carls franchisee cannot waive claims under state franchise law, including claims related to fraud in the inducement. It also prevents franchisees from disclaiming reliance on statements made by Carls, franchise sellers, or anyone acting on Carls's behalf. This clause takes precedence over any conflicting terms in any document related to the franchise agreement.
For prospective Carls franchisees in these states, this addendum offers significant protection. It ensures that franchisees can pursue legal remedies if they believe they were misled or defrauded during the franchise sales process, and that they cannot inadvertently waive these rights through standard paperwork. This protection is particularly important in states with strong franchise laws, as it reinforces the franchisee's ability to hold Carls accountable for its representations.