For Carls franchisees in Applicable Franchise Registration States, what is the specific effect of the rider on the franchise disclosure document?
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 Franchise Disclosure Document, a rider is added to the FDD for franchisees residing in or planning to operate a Carl's Jr. restaurant in an "Applicable Franchise Registration State." These states include California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
The rider specifically addresses the enforceability of statements, questionnaires, or acknowledgments signed by the franchisee at the start of their franchise relationship. It stipulates that no such document can waive claims under applicable state franchise law, including claims of fraud in the inducement. Additionally, these documents cannot disclaim reliance on statements made by Carls, its franchise sellers, or anyone acting on Carls's behalf.
In essence, this rider provides an additional layer of protection for franchisees in these states. It ensures that franchisees cannot inadvertently waive their legal rights or be prevented from holding Carls accountable for representations made during the franchise sales process. This rider supersedes any conflicting terms in other documents executed in connection with the franchise agreement, reinforcing the franchisee's rights under state franchise laws.