factual

Does the Chesters FDD allow for waivers of claims under state franchise law?

Chesters Franchise · 2025 FDD

Answer from 2025 FDD Document

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EXHIBIT F

STATE ADDENDA AND AGREEMENT RIDERS

NO WAIVER OR DISCLAIMER OF RELIANCE IN CERTAIN STATES

The following provision applies only to franchisees and franchises that are subject to the state franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin:

No statement, questionnaire, or acknowledgement signed or agreed to by you 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 us, any franchise seller, or any other person acting on our behalf. This provision supersedes any other term of any document executed in connection with the franchise.

ADDENDUM TO CHESTER'S INTERNATIONAL, LLC MULTI-STATE FRANCHISE DISCLOSURE DOCUMENT

CALIFORNIA

    1. THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT.
    1. SECTION 31125 OF THE FRANCHISE INVESTMENT LAW REQUIRES US TO GIVE YOU A DISCLOSURE DOCUMENT APPROVED BY THE COMMISSIONER OF THE DEPARTMENT OF FINANCIAL PROTECTION & INNOVATION BEFORE WE ASK YOU TO CONSIDER A MATERIAL MODIFICATION OF YOUR AGREEMENT.
    1. Our website has not been reviewed or approved by the California Department of Financial Protection & Innovation. Any complaints concerning the content of the website may be directed to the California Department of Financial Protection & Innovation at www.dfpi.ca.gov.
    1. The following language is added to the "Special Risks to Consider About This Franchise" page:

You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control

    1. Item 3 of the Franchise Disclosure Document is amended to provide that neither the franchisor, nor any person in Item 2 of the Franchise Disclosure Document, is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in that association or exchange.
    1. The following paragraphs are added at the end of the chart in Item 17 of the Franchise Disclosure Document:

California Business and Professions Code Sections 20000 through 20043 provide rights to franchisees concerning transfer, termination or nonrenewal of a franchise. If the Agreement contains a provision that is inconsistent with the law, the law will control.

The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.

The Agreement requires application of the laws of the State of Alabama. This provision might not be enforceable under California law.

  1. There are no bankruptcy or release provisions in our franchise documents.

ILLINOIS

  1. The following statements are added to the end of Item 17:

Except for federal law, Illinois law governs the Franchise Agreement.

In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.

Franchisees' rights upon termination and non-renewal are set forth in Sections 19 and 20 of the Illinois Franchise Disclosure Act.

In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.

MARYLAND

  1. The "Summary" section of Item 17(w) in the Franchise Disclosure Document, captioned "Choice of law," is amended to read as follows:

Except for federal law and claims arising under the Maryland Franchise Registration and Disclosure Law, Alabama law applies.

2 The following language is added to the end of the chart in Item 17:

You must bring any claims arising under the Maryland Franchise Registration and Disclosure Law within 3 years after the grant of the franchise.

MINNESOTA

  1. The following paragraphs are added at the end of the chart in Item 17 of the Franchise Disclosure Document:

Minn. Stat. § 80C.21 and Minn. Rule Part 2860.4400J prohibit the franchiser from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring the franchisee to consent to liquidated damages, termination penalties or judgment notes. In addition, nothing in the Franchise Disclosure Document or agreement(s) can abrogate or reduce (1) any of the franchisee's rights as provided for in Minnesota Statute 80Cor (2) franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.

With respect to franchises governed by Minnesota law, the franchiser will comply with Minnesota Statute 80C.14 Subd.

Source: Item 23 — **RECEIPTS (FDD pages 48–197)

What This Means (2025 FDD)

According to the 2025 Chesters FDD, the franchise agreement's stance on waiving state franchise law claims varies by state. For franchisees subject to franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin, no statement or acknowledgement can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Chesters or its representatives. This provision overrides any conflicting terms in franchise documents.

For instance, the FDD specifies that Illinois law governs the franchise agreement, except for federal law. It also states that any provision designating jurisdiction and venue outside of Illinois is void, although arbitration outside the state is permitted. Furthermore, any attempt to waive compliance with the Illinois Franchise Disclosure Act or other Illinois laws is void. Similarly, in Minnesota, the FDD indicates that the franchisor cannot require litigation outside of Minnesota, mandate jury trial waivers, or enforce liquidated damages, termination penalties, or judgment notes. The franchise documents cannot reduce any franchisee rights under Minnesota Statute 80Cor or rights to procedures, forums, or remedies provided by law.

In Washington, a release or waiver of rights requiring a franchisee to waive compliance with the Washington Franchise Investment Protection Act is void unless it is part of a negotiated settlement with independent counsel after the agreement is in effect, as per RCW 19.100.220(2). This also applies to waivers during franchise renewal or transfer, with the same exception. Provisions that unreasonably restrict the statute of limitations for claims or rights under the Washington Franchise Investment Protection Act may not be enforceable. Therefore, prospective Chesters franchisees need to carefully review the state-specific addenda in Exhibit F of the FDD to understand how their state's laws affect the enforceability of waivers and other provisions in the franchise agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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