Is a Crave Cookies franchisee required to consent to a limitation of claims?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- **5.
Limitation of Liability.** Franchisee's commitment to develop Crave Cookies businesses is in the nature of an option only.
If Crave Cookies Franchising terminates this MUDA for Franchisee's default, Franchisee shall not be liable to Crave Cookies Franchising for lost future revenues or profits from the unopened Crave Cookies businesses.
Franchisee may terminate this MUDA at any time.
[This is our current standard form of General Release. This document is not signed when you purchase a franchise. In circumstances such as a renewal of your franchise or as a condition of our approval of a sale of your franchise, we may require you to sign a general release.]
This General Release ("Release") is executed by the undersigned ("Releasor") in favor of Crave Cookies Franchising, LLC, a Utah limited liability company ("Crave Cookies Franchising").
Background Statement: [describe circumstances of Release]
Releasor agrees as follows:
- **1.
Release.** Releasor (on behalf of itself and its parents, subsidiaries and affiliates and their respective past and present officers, directors, shareholders, managers, members, partners, agents, and employees (collectively, the "Releasing Parties")) hereby releases Crave Cookies Franchising, its affiliates, and their respective directors, officers, shareholders, employees, and agents (collectively, the "Released Parties") from any and all claims, causes of action, suits, debts, agreements, promises, demands, liabilities, contractual rights and/or obligations, of whatever nature, known or unknown, which any Releasing Party now has or ever had against any Released Party based upon and/or arising out of events that occurred through the date hereof, including without limitation, anything arising out of the Franchise Agreement (collectively, "Claims").
- **2.
Covenant Not to Sue.** Releasor (on behalf of all Releasing Parties) covenants not to initiate, prosecute, encourage, assist, or (except as required by law) participate in any civil, criminal, or administrative proceeding or investigation in any court, agency, or other forum, either affirmatively or by way of cross-claim, defense, or counterclaim, against any Released Party with respect to any Claim.
The Limitations of Claims section must comply with Minnesota Statutes, Section 80C.17, Subd. 5, and therefore the applicable provision of the Agreement is amended to state "No action may be commenced pursuant to Minnesota Statutes, Section 80C.17 more than three years after the cause of action accrues."
Further, franchisees cannot waive any such claims pursuant to RCW 19.100.220. As such, we believe that it may not be in "good faith" in accordance with RCW 19.100.180(1) to include provisions that may be prohibited under Washington law. As such, the following statements do not apply to Washington Franchisees:
- (1) Section 5.4(c) of the Franchise Agreement:
- "Franchisee acknowledges that Crave Cookies Franchising accepts no responsibility for the performance of the business."
- (2) Section 6.1(iii) of the Franchise Agreement:
- "... Crave Cookies has no liability to Franchisee with respect to the location of the Business."
Source: Item 23 — RECEIPTS (FDD pages 47–194)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the franchisee's commitment to develop Crave Cookies businesses is treated as an option. Specifically, if Crave Cookies terminates the Multi-Unit Development Agreement (MUDA) due to the franchisee's default, the franchisee will not be liable for lost future revenues or profits from unopened Crave Cookies businesses. The franchisee also has the option to terminate the MUDA at any time. This limitation of liability appears to favor the franchisee in the event of termination related to unopened locations under a MUDA. However, this limitation may not apply to individual franchise agreements.
However, the FDD also includes a standard form of General Release that Crave Cookies may require a franchisee to sign under certain circumstances, such as a franchise renewal or the approval of a sale of the franchise. By signing this release, the franchisee releases Crave Cookies from all claims, known or unknown, arising out of events through the date of the release, including anything arising out of the Franchise Agreement. The franchisee also agrees not to initiate any legal actions against Crave Cookies. This release effectively limits the franchisee's ability to make claims against the franchisor.
Furthermore, the New York Rider to the Franchise and Multi-Unit Development Agreement includes a clause related to the statute of limitations. It states that no action may be commenced pursuant to Minnesota Statutes, Section 80C.17 more than three years after the cause of action accrues. This clause amends the applicable provision of the Agreement to comply with Minnesota law, setting a time limit for franchisees to bring legal actions.
Finally, the Washington Franchise Disclosure Document and Franchise Agreement Addendum states that franchisees cannot waive any claims under the Washington Franchise Investment Protection Act. Certain statements in the Franchise Agreement, such as those absolving Crave Cookies of responsibility for business performance or location suitability, do not apply to Washington franchisees. This addendum ensures that Washington franchisees retain their rights under state law, regardless of any conflicting provisions in the franchise agreement.