If the Cream franchise is subject to franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, what effect do franchisee-signed statements have regarding claims under 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, if a franchisee is subject to franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, any statement, questionnaire, or acknowledgment signed by the franchisee in connection with starting the franchise relationship does not waive claims under applicable state franchise law. This includes claims related to fraud in the inducement. Additionally, these documents cannot disclaim reliance on statements made by Cream, franchise sellers, or individuals acting on Cream's behalf.
This means that franchisees in these states retain their rights under state franchise laws, regardless of any agreements they may have signed. For example, if a franchisee believes they were misled by Cream during the franchise sales process, they can still pursue a claim for fraud, even if they signed a document stating they were not relying on any representations made by the franchisor. This protection is designed to ensure that franchisees are not unknowingly giving up their legal rights when entering into a franchise agreement.
This provision is significant because it overrides any conflicting terms in the franchise agreement or related documents. Cream cannot use a signed statement from a franchisee to prevent them from pursuing a claim under state franchise law in the specified states. This offers an additional layer of protection for franchisees, ensuring they can seek legal recourse if they believe their rights have been violated. Prospective franchisees should carefully review the state-specific addenda to understand how these protections apply in their particular state.