Under the Indiana Acts, what is the effect of the Desi District franchise agreement requiring the franchisee to prospectively assent to a waiver?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- (5) Requiring the franchisee to prospectively assent to a release, assignment, novation, waiver, or estoppel which purports to relieve any person from liability to be imposed by the Indiana Deceptive Franchise Practices Act or requiring any controversy between the franchisee and the franchisor to be referred to any person, if referral would be binding on the franchisee.
This subsection (5) does not apply to arbitration before an independent arbitrator.
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the Indiana Acts, specifically the Indiana Deceptive Franchise Practices Act, address the effect of franchise agreements requiring franchisees to prospectively assent to a waiver.
The franchise agreement cannot require the franchisee to prospectively agree to a release, assignment, novation, waiver, or estoppel that would relieve any person from liability imposed by the Indiana Deceptive Franchise Practices Act. Additionally, the agreement cannot mandate that any dispute between the franchisee and Desi District be referred to any person if that referral would be binding on the franchisee.
However, the FDD specifies that this restriction does not apply to arbitration before an independent arbitrator. This means that while Desi District cannot force a franchisee to waive their rights under the Indiana Deceptive Franchise Practices Act through a standard agreement clause, disputes can still be resolved through independent arbitration.