Does the Washington addendum to the Cilantro Taco Grill FDD affect the renewal rights of the franchisee?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee 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 any franchisor, franchise seller, or other person acting on behalf of the franchisor.
This provision supersedes any other term of any document executed in connection with the franchise.
- 5.3 Notice Required by Law. If applicable law requires Franchisor to give notice to Franchisee prior to the expiration of the Term, this Agreement shall remain in effect on a month-to-month basis until Franchisor has given the notice required by such applicable law. If Franchisor is not offering new Cilantro Taco Grill franchises, is in the process of revising, amending or renewing Franchisor's form of franchise agreement or disclosure document, or Franchisor is not lawfully able to offer Franchisee the then-current form of Successor Franchise Agreement at the time Franchisee advises Franchisor pursuant to Paragraph 5.1 hereof that Franchisee desires to renew, Franchisor may, in Franchisor's sole discretion, (i) offer to renew this Agreement upon the same terms set forth herein for the appropriate successor term or (ii) offer to extend the Term hereof on a month-to-month basis following the expiration of the Term for as long as Franchisor deems necessary or appropriate so that Franchisor may lawfully offer the then current form of Successor Franchise Agreement. Any timeframes specified in this Paragraph 5 shall be inclusive of any state mandated notice periods.
- 5.4 Additional Reservation of Rights. Notwithstanding anything herein to the contrary, Franchisor reserves the right not to enter into a successor franchise agreement for this Franchise as a result of a decision to withdraw from a marketing area or the Territory in which Franchisee's Franchised Business is located.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, the Washington addendum includes stipulations that may indirectly affect a franchisee's renewal rights. Specifically, the addendum states that no statement signed by a franchisee can waive claims under Washington's franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor. This provision supersedes any other term in any document related to the franchise agreement.
This means that while the addendum doesn't directly address renewal rights, it ensures that a franchisee in Washington cannot unknowingly waive their rights to legal recourse regarding the franchise agreement, which could influence decisions related to renewal. For instance, if a franchisee believes they were misled during the initial agreement, this addendum protects their right to pursue a claim, potentially affecting their decision to renew or not.
Furthermore, the Franchise Disclosure Document states that if Cilantro Taco Grill is not offering new franchises, is revising its franchise agreement, or cannot lawfully offer a successor agreement when the franchisee seeks to renew, Cilantro Taco Grill has the discretion to offer renewal on the same terms or extend the term month-to-month until a current successor agreement can be offered. Additionally, Cilantro Taco Grill reserves the right not to offer a successor agreement if it decides to withdraw from the franchisee's marketing area or territory. These stipulations, combined with the protections in the Washington addendum, create a legal framework that Cilantro Taco Grill franchisees in Washington should carefully consider when evaluating their renewal options.
Therefore, while the Washington addendum doesn't explicitly change the renewal terms, it reinforces the franchisee's legal rights within the renewal process, ensuring they cannot unknowingly relinquish protections under Washington franchise law. This could be a significant benefit for franchisees in Washington, as it provides an additional layer of security and recourse should disputes arise during the renewal process.