Can a Crab N Spice franchisee waive claims under state franchise law?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
B N SPICE GROUP
NEW YORK RIDER TO FRANCHISE AGREEMENT
This Rider amends the Agreement dated (the , a ("Franchisee"). "Agreement"), between Crab N Spice Group, a California corporation ("CNS Franchising") and 1. Definitions. in the Agreement. Capitalized terms used but not defined in this Rider have the meanings given 2. Waivers Not Required. would relieve CNS Franchising York General Business Law, Article 33. Notwithstanding any provision of the Agreement to the contrary, Franchisee is not required to assent to a release, assignment, novation, waiver or estoppel which or any other person from any duty or liability imposed by New 3. deleted. Waivers of New York Law Deleted. Any condition, stipulation, or provision in the Agreement purporting to bind Franchisee to waive compliance by CNS Franchising with any provision of New York General Business Law, or any rule promulgated thereunder, is hereby 4. New York Franchises Law shall govern any claim arising under that law. Governing Law. Notwithstanding any provision of the Agreement to the contrary, the 5. Effective Date. Agreed to by: FRANCHISEE: This Rider is effective as of the Effective Date. FRANCHISOR: CRAB N SPICE GROUP Date: Date:
NORTH DAKOTA RIDER TO FRANCHISE AGREEMENT
| This Rider amends the Agreement dated (the | ||
|---|---|---|
| "Agreement"), between Crab N Spice Group, a California corporation ("CNS Franchising") and | ||
| , a ("Franchisee"). | ||
| 1. | in the Agreement. | Definitions. |
| Capitalized terms used but not defined in this Rider have the meanings given | ||
| 2. | the following: | Amendments. |
| The | ||
| Agreement (and any Guaranty Agreement) is amended to comply with | ||
| (1) | Restrictive Covenants: Every contract by which Franchisee, any Guarantor, or any | |
| other person is restrained from exercising a lawful profession, trade, or business of | ||
| any kind is subject to NDCC Section 9-08-06. | ||
| (2) | Situs of Arbitration Proceedings: Franchisee and any Guarantor are not required to | |
| agree to the arbitration of disputes at a location that is remote from the site of | ||
| Franchisee's business. | ||
| (3) | Restrictions on Forum: Franchisee and any Guarantor are not required to consent | |
| to the jurisdiction of courts outside of North Dakota. |
Source: Item 22 — CONTRACTS (FDD pages 50–51)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, the ability of a franchisee to waive claims under state franchise law varies by state. For instance, in New York, the New York Rider to the Franchise Agreement specifies that a franchisee is not required to assent to a release, assignment, novation, waiver, or estoppel that would relieve CNS Franchising from any duty or liability imposed by New York General Business Law, Article 33. Any provision in the agreement that binds the franchisee to waive compliance with New York General Business Law is deleted. Similarly, the New York Franchise Law governs any claim arising under that law, overriding any conflicting provision in the agreement.
In Maryland, the Maryland Rider to the Franchise Agreement states that CNS Franchising cannot require a prospective franchisee to agree to a release, assignment, novation, waiver, or estoppel that would relieve CNS or any other person from liability under the Maryland Franchise Law as a condition of the sale of a franchise. Additionally, any general release required as a condition of renewal, sale, or assignment/transfer does not apply to any liability under the Maryland Franchise Law. The franchisee also retains the right to file a lawsuit alleging a cause of action arising under the Maryland Franchise Law in any court of competent jurisdiction in the State of Maryland, regardless of any conflicting provision in the agreement.
In North Dakota, the North Dakota Rider to the Franchise Agreement indicates that a franchisee is not required to consent to a limitation of claims, and the statute of limitations under North Dakota law applies. The franchisee is also not required to agree to the arbitration of disputes at a location that is remote from the site of the franchisee's business or to consent to the jurisdiction of courts outside of North Dakota. Similarly, franchisees are not required to consent to liquidated damages or termination penalties. In Washington, a release or waiver of rights executed by a franchisee shall not include rights under the Washington Franchise Investment Protection Act except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel.
In California, the California Rider to the Franchise Agreement states that for franchisees operating outlets located in California, the California Franchise Investment Law and the California Franchise Relations Act will apply regardless of the choice of law or dispute resolution venue stated elsewhere. A contract that restrains a former franchisee from engaging in a lawful trade or business is void under California Business and Professions Code Section 16600 to the extent of the restraint. These state-specific riders ensure that franchisees' rights under state laws are protected and cannot be waived through standard franchise agreement terms.