If a Carls franchisee is a non-resident acquiring franchise rights in Illinois, does the provision regarding waivers of claims apply?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee is a resident of one of the states listed in the heading of this Section 32.I (the "Applicable Franchise Registration State") or a non-resident who is acquiring franchise rights permitting the location of the Franchised Restaurant in the Applicable Franchise Registration State, then the following applies:
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 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls Franchise Disclosure Document, a specific provision regarding waivers of claims applies to franchisees who are either residents of certain states or non-residents acquiring franchise rights in those states. This provision is applicable in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
For a non-resident franchisee acquiring franchise rights in Illinois, this provision ensures that no statement, questionnaire, or acknowledgment signed in connection with the franchise relationship can waive claims under applicable state franchise law, including claims of fraud in the inducement. Additionally, it prevents the franchisee from disclaiming reliance on statements made by Carls or anyone acting on its behalf. This protection supersedes any other conflicting terms in any document executed as part of the franchise agreement.
In practical terms, this means that if a Carls franchisee who is not a resident of Illinois but is opening a franchise there, they retain their rights to pursue claims related to franchise law violations or misrepresentations, regardless of any waivers they may have signed. This offers an additional layer of protection to franchisees in these states, ensuring they are not unknowingly giving up their legal rights.