Does the Cream franchise agreement allow a franchisee in Illinois to waive claims of fraud in the inducement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
The following provision applies if you or the franchise granted hereby are subject to the franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin: 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.
ILLINOIS
The following provisions are annexed to and form part of this Agreement if and only if, and in such case to the extent that: (a) you are domiciled in the State of Illinois or (b) the offer of the franchise is made or accepted in the State of Illinois and your franchised business is or will be operated in the State of Illinois.
- The following language is added to the end of the Agreement:
Except for the U.S. Federal Arbitration Act and other federal laws in the U.S., the laws of the State of Illinois will govern this Agreement.
Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration outside of Illinois.
Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee is subject to franchise laws in Illinois, any statement, questionnaire, or acknowledgment signed in connection with the commencement of the franchise relationship will not waive claims under any applicable state franchise law, including fraud in the inducement. This protection ensures that franchisees in Illinois cannot inadvertently or intentionally relinquish their rights to pursue legal action based on fraudulent misrepresentations made by Cream during the franchise sales process. This provision overrides any conflicting terms in any document executed in connection with the franchise agreement.
This safeguard is particularly important for prospective Cream franchisees in Illinois because it prevents the franchisor from using standardized paperwork to shield itself from liability for potential fraud. It ensures that franchisees retain their legal recourse if they believe they were misled into investing in the franchise. This protection aligns with the Illinois Franchise Disclosure Act, which aims to protect franchisees from unfair practices.
Furthermore, the FDD states that Section 41 of the Illinois Franchise Disclosure Act specifies that any condition, stipulation, or provision that attempts to bind a person acquiring a franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void. This reinforces the state's commitment to protecting franchisees' rights and ensuring that they cannot be compelled to surrender their legal protections. This provision underscores the importance of franchisees understanding their rights and seeking legal counsel if they suspect any form of misrepresentation or fraud during the franchise sales process.