For a Cream franchise in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, can a franchisee waive claims of fraud in the inducement under applicable state franchise law?
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.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin cannot waive claims of fraud in the inducement under applicable state franchise law. The FDD explicitly states that any statement, questionnaire, or acknowledgment signed by a franchisee at the start of the franchise relationship cannot waive such claims. This protection ensures that franchisees in these states retain their legal rights to pursue claims of fraud, regardless of any agreements made during the initial franchising process. This provision is designed to protect franchisees from potentially misleading or fraudulent practices by the franchisor.
This safeguard is particularly important because the initial stages of a franchise relationship often involve significant information exchange and decision-making. Franchisees rely on the franchisor's representations about the business opportunity, and this clause ensures they can hold Cream accountable for the accuracy and truthfulness of those representations. The clause specifically prevents franchisees from disclaiming reliance on statements made by the franchisor or their representatives. This means that franchisees can later claim they relied on specific statements when deciding to invest in the franchise.
The FDD also notes that this provision supersedes any other conflicting terms in any document executed in connection with the franchise. This reinforces the importance of the protection and ensures that no other clause can inadvertently undermine the franchisee's right to pursue fraud claims. This protection is consistent with franchise laws in these states, which aim to balance the power dynamic between franchisors and franchisees and prevent overreaching by franchisors. Prospective franchisees should carefully review all documents and disclosures provided by Cream, understanding that this provision offers a critical layer of legal protection against potential fraud.