What is the implication of the Engel & Volkers Franchise Agreement amendment regarding the franchisee's reliance on the franchise disclosure document?

According to Engel & Volkers's 2025 Franchise Disclosure Document, several states have specific amendments to the franchise agreement that protect franchisees. For franchisees in states that have adopted the NASAA Statement of Policy Regarding the Use of Franchise Questionnaires and Acknowledgements, such as California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin, an amendment ensures that no statement or acknowledgment signed by the franchisee can waive claims under state franchise law, including fraud, or disclaim reliance on statements made by Engel & Volkers or its representatives. This amendment supersedes any conflicting terms in the franchise agreement.

This amendment is highly significant for prospective Engel & Volkers franchisees in these states. It prevents Engel & Volkers from enforcing waivers that would limit the franchisee's ability to bring claims of fraud or misrepresentation based on information provided during the franchise sales process. This protection ensures that franchisees can rely on the information provided by Engel & Volkers when making their investment decision and are not penalized for doing so.

For example, in Washington state, the amendment explicitly states that '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 specific language reinforces the franchisee's right to seek legal recourse if they believe they were misled during the franchise sales process, regardless of any prior agreements or acknowledgments. Engel & Volkers franchisees should carefully review these state-specific amendments to understand their rights and protections under the franchise agreement.