Can Checkersrallys require a franchisee to agree to a release that deprives them of rights and protections within the franchise agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (a) A prohibition on the right of a franchisee to join an association of franchisees.
- (b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in this act. This shall not preclude a franchisee, after entering into a franchise agreement from settling any and all claims.
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishing not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (i) the term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.
- (e) A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This section does not require a renewal provision.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, certain provisions that deprive a franchisee of their rights and protections are considered void and unenforceable. Specifically, any requirement that a franchisee agree to a release, assignment, novation, waiver, or estoppel that takes away rights and protections provided within the relevant franchise act is not permissible. However, this does not prevent a franchisee from settling claims after entering into the franchise agreement.
For franchisees in Minnesota, Checkersrallys is prohibited from requiring a general release as a condition of transfer or renewal, according to Minn. Rule 2860.4400D. Furthermore, Minn. Rule 2860.4400J states that a franchisee cannot waive any rights, nor can they consent to Checkersrallys obtaining injunctive relief, although Checkersrallys may still seek such relief. The court will determine if a bond is required in such cases. This rule also prohibits the waiver of a jury trial.
In California, the Franchise Investment Law (Corporations Code sections 31512 and 31512.1) specifies that any part of a franchise agreement or related document that forces the franchisee to waive specific provisions of the law goes against public policy and is void. Checkersrallys is also prohibited from denying or disclaiming representations made to the franchisee, their ability to rely on those representations, or any violations of the law. These stipulations ensure that franchisees are not strong-armed into relinquishing their legal rights and protections under the franchise agreement.