What does the Virginia Rider state regarding the franchisee's right to claim fraud in the inducement with Checkers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| 1. | Background. Franchisor and Franchisee are parties to that certain Franchise Agreement dated , ("Agreement") that has been entered into concurrently with the entering of this Rider. This Rider is annexed to and forms part of the Agreement. This Rider is being executed because the Franchised Restaurant to be operated by Franchisee pursuant to the Agreement will be located in the Commonwealth of Virginia. This Rider shall be of no force and effect unless the jurisdictional requirements of the Virginia Retail Franchising Act and any regulations thereunder are met independently without reference to this Rider. |
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| 2. | Initial Franchise Fee. Section 6.01 shall be amended by adding the following: |
| The Virginia State Corporation Commission's Division of Securities and Retail | |
| Franchising requires Franchisor to defer payment of the initial franchise fee and other | |
| initial payments owed by Franchisee to Franchisor until Franchisor has completed its | |
| pre-opening obligations under the Franchise Agreement. | |
| 3. | 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 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the Virginia Rider includes a provision that protects franchisees from unintentionally waiving their right to claim fraud in the inducement. This means that any document signed by a Checkers franchisee in Virginia related to starting the franchise cannot be interpreted as a waiver of their right to pursue a fraud claim. This protection applies whether the fraud claim is based on common law or statutory grounds.
Specifically, the rider ensures that franchisees can still claim fraud even if they signed a disclaimer, questionnaire, or other statement. This prevents Checkers as the franchisor from using such documents to argue that the franchisee gave up their right to claim they were misled into investing in the franchise. The rider also clarifies that franchisees retain the right to rely on statements or information provided by Checkers or its representatives during the franchise sales process.
This provision is significant because it overrides any other conflicting terms in the franchise agreement or related documents. It strengthens the franchisee's position by ensuring they can seek legal recourse if they believe they were fraudulently induced into investing in a Checkers franchise. This protection is particularly important in Virginia, where franchise relationships are governed by the Virginia Retail Franchising Act.