Under what conditions can Checkers waive an obligation of the franchisee?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, there are specific conditions and limitations regarding the waiver of franchisee obligations, particularly concerning initial fees and legal rights. In several states, addenda to the FDD stipulate that Checkers will defer the franchisee's payment of initial fees under the Franchise Agreement until Checkers has satisfied all pre-opening obligations and the franchisee has commenced business operations. This deferral also applies to initial fees under the Development Agreement, linking it to the fulfillment of pre-opening obligations under the first franchise agreement.
However, the FDD also clarifies that no disclaimer, questionnaire, clause, or statement signed by a franchisee can waive any claim of fraud in the inducement. This means a franchisee retains the right to pursue claims related to fraudulent statements or information provided by Checkers or its representatives that materially induced the franchisee's investment. This provision is highlighted in addenda for multiple states, including Maryland, Virginia, Michigan, and Minnesota, emphasizing its importance.
Furthermore, certain states have laws that prevent franchisees from waiving compliance with state franchise laws. For example, in Illinois, any provision that binds a person to waive compliance with the Illinois Franchise Disclosure Act is void. Similarly, Minnesota law prohibits franchisees from waiving certain rights, consenting to injunctive relief sought by Checkers, or being required to waive a jury trial. These state-specific regulations ensure that franchisees retain certain legal protections and rights, regardless of what the franchise agreement might otherwise state.
In essence, while Checkers may defer certain financial obligations under specific conditions, franchisees cannot waive their rights to claims of fraud or protections provided by state franchise laws. These stipulations aim to protect franchisees from potentially overreaching terms in the franchise agreement and ensure they maintain recourse in cases of misrepresentation or non-compliance by Checkers.