Does the Carvel franchise agreement release extend to claims arising from representations made in the Franchise Disclosure Document (FDD) delivered to the franchisee?

According to Carvel's 2025 Franchise Disclosure Document, the franchise agreement includes provisions regarding releases and acknowledgements by the franchisee, particularly concerning reliance on representations and waivers of liability. However, the FDD also contains specific stipulations that protect franchisees in certain states from waiving rights or disclaiming reliance on statements made by Carvel, including those in the FDD itself. These stipulations primarily apply to franchisees and franchised businesses subject to state franchise disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin.

Specifically, for franchisees in the aforementioned states, no statement, questionnaire, or acknowledgement signed by the franchisee can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by Carvel, any franchise seller, or any person acting on behalf of Carvel. This provision supersedes any other term of any document executed in connection with the franchise. This ensures that Carvel franchisees in these states retain their legal rights and recourse based on statements made in the FDD or by Carvel representatives.

Moreover, the general release required as a condition of renewal, sale, and/or assignment/transfer does not apply to any liability under the Maryland Franchise Registration and Disclosure Law. This means that even if a franchisee signs a general release, it will not waive their rights concerning liabilities arising from the Maryland Franchise Registration and Disclosure Law. Additionally, all representations requiring prospective franchisees to assent to a release, estoppel, or waiver of liability are not intended to act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law. Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.

For a prospective Carvel franchisee, it is crucial to understand these provisions, especially if they are located in one of the states with specific protections. They should consult with a legal professional to fully understand their rights and obligations under the franchise agreement and the FDD, ensuring they are aware of the limitations and protections afforded to them by state franchise laws. This will help them make informed decisions and protect their interests throughout the franchise relationship.