What happens to provisions in the Cinnaholic franchise agreement that deny a franchisee's reliance on the franchise disclosure document?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
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Section 31512.1- Franchise Agreement Provisions Void as Contrary to Public Policy:
Any provision of a franchise agreement, franchise disclosure document, acknowledgement, questionnaire, or other writing, including any exhibit thereto, disclaiming or denying any of the following shall be deemed contrary to public policy and shall be void and unenforceable:
- (a) Representations made by the franchisor or its personnel or agents to a prospective franchisee.
- (b) Reliance by a franchisee on any representations made by the franchisor or its personnel or agents.
- (c) Reliance by a franchisee on the franchise disclosure document, including any exhibit thereto.
- (d) Violations of any provision of this division.
California's Franchise Investment Law (Corporations Code sections 31512 and 31512.1) states that any provision of a franchise agreement or related document requiring the franchisee to waive specific provisions of the law is contrary to public policy and is void and unenforceable. The law also prohibits a franchisor from disclaiming or denying (i) representations it, its employees, or its agents make to you, (ii) your ability to rely on any representations it makes to you, or (iii) any violations of the law.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, any provision within the franchise agreement, franchise disclosure document, or any other written agreement that denies a franchisee's reliance on the franchise disclosure document is considered against public policy and will be void and unenforceable. This means Cinnaholic cannot enforce any clause that prevents a franchisee from claiming they relied on the information provided in the FDD when making their investment decision. This protection extends to any exhibits included with the FDD.
This provision is designed to protect prospective franchisees by ensuring they can depend on the information provided by Cinnaholic during the franchise sales process. It prevents Cinnaholic from including clauses that might limit their liability for misrepresentations or omissions in the FDD. This is particularly important because the FDD is a key document that prospective franchisees use to evaluate the franchise opportunity and make informed decisions.
Furthermore, Cinnaholic's FDD states that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law, including claims of fraud in the inducement, or disclaim reliance on statements made by Cinnaholic or its representatives. This reinforces the franchisee's right to depend on the information provided by the franchisor and prevents Cinnaholic from using acknowledgments to circumvent franchise laws. This protection is also highlighted in addenda specific to Illinois and Washington, further emphasizing the importance of franchisees' ability to rely on the FDD and franchisor representations.