Can a Cream franchisee disclaim reliance on statements made by the franchisor in certain states?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
The following provision applies if you or the franchise granted hereby are subject to the franchise registration 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 (1) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (2) 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 the 2025 FDD, Cream franchisees in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin cannot disclaim reliance on statements made by Cream or its representatives. Specifically, any statement, questionnaire, or acknowledgment signed by a franchisee at the start of the franchise relationship cannot waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor or its agents. This provision overrides any conflicting terms in the franchise agreement.
This protection ensures that franchisees in these states can hold Cream accountable for representations made during the franchise sales process. It prevents Cream from using standard contract language to shield itself from liability for misleading or false statements that may have induced a franchisee to invest in the business. This is particularly important in states with franchise-specific laws designed to protect franchisees from potential abuses by franchisors.
For prospective Cream franchisees in these states, this means that they retain the right to pursue legal action based on misrepresentations, even if they have signed documents that appear to waive such claims. However, franchisees should still conduct thorough due diligence and seek legal counsel to fully understand their rights and obligations under the franchise agreement and applicable state laws.
Cream also requires franchisees in all other states to sign a representation statement acknowledging that they are not relying on any statements, representations, promises, or assurances that are not specifically set forth in Cream's Franchise Disclosure Document (the "FDD") in deciding to purchase the franchise.