Under what condition is a Cream franchisee allowed to contest their liability for taxes without breaching the agreement?
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 or disclosure 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)
Based on the 2025 FDD, the franchise agreement for Cream states that if the franchise is subject to franchise registration or disclosure laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, no statement, questionnaire, or acknowledgment signed by the franchisee can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Cream or its representatives. This provision overrides any other conflicting terms in the franchise agreement.
In practical terms, this means that if a Cream franchisee in one of the listed states signs a document that appears to waive their right to make claims against Cream, that waiver may not be enforceable under state law. This protects franchisees from inadvertently giving up their legal rights during the initial stages of the franchise relationship.
For a prospective Cream franchisee, this is a beneficial provision. It ensures that they retain their rights under state franchise laws, even if they sign documents that seem to limit those rights. However, it is important to note that this protection only applies in the specified states and pertains to claims arising under state franchise law, such as fraud in the inducement. Franchisees in other states or with other types of claims may not have the same protection. It is always advisable for franchisees to consult with an attorney to fully understand their rights and obligations under the franchise agreement and applicable state laws.