For Chesters franchisees in applicable states, can a signed statement waive claims of fraud in the inducement under state franchise law?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, in certain states, a signed statement from a franchisee cannot waive claims related to state franchise law, including fraud in the inducement. This protection applies specifically to 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.
This provision ensures that franchisees in these states retain their legal rights and are not bound by any agreements that might force them to relinquish claims of fraud. The FDD explicitly states that this rule supersedes any conflicting terms in any document executed in connection with the franchise, reinforcing the protection for franchisees in the listed states.
For a prospective Chesters franchisee, this means that if the franchise is located in one of the specified states, any attempt by Chesters to have the franchisee waive their right to sue for fraud in the inducement through a signed statement will be unenforceable. This offers a level of security, ensuring that franchisees can pursue legal remedies if they believe they were misled into investing in the franchise. This protection is particularly important in the context of franchise agreements, which tend to heavily favor the franchisor.