In connection with the commencement of the Cinnaholic franchise relationship, can a franchisee waive claims under any applicable state franchise law, including fraud in the inducement?

According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee cannot waive claims under any applicable state franchise law, including fraud in the inducement, through any statement, questionnaire, or acknowledgment signed at the commencement of the franchise relationship. This protection is in place to ensure that franchisees retain their legal rights and recourse, even if they have signed documents that might suggest otherwise. This provision takes precedence over any conflicting terms in any document related to the franchise agreement. This protection is reiterated in addenda required by the states of South Carolina, Virginia, Illinois and Washington. Maryland and Michigan also have similar protections in place for franchisees.

This means that Cinnaholic franchisees are entitled to the full protection of state franchise laws, regardless of any waivers they may have inadvertently signed. The FDD emphasizes that franchisees should not be pressured into relinquishing their legal rights, especially concerning issues like fraud. This safeguard is particularly important because the franchisor is in a more powerful negotiating position than the franchisee.

Several states have specific regulations to protect franchisees' rights. For example, California's Franchise Investment Law voids any provision requiring a franchisee to waive specific legal protections. Similarly, Minnesota prohibits franchisors from requiring franchisees to agree to general releases, although franchisees can enter into releases as part of voluntary dispute settlements. Illinois also prohibits any condition that would bind a person acquiring a franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois. These state-specific provisions reinforce the general principle that franchisees should not be forced to surrender their legal rights at the outset of the franchise relationship.

In Washington, a release or waiver of rights in the franchise agreement is void except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Michigan prohibits a requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in the Michigan Franchise Act. These protections ensure that franchisees are not unfairly disadvantaged and can seek legal remedies if necessary.