Does the Exit franchise agreement receipt waive the right to challenge the validity or enforceability of the Franchise Agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to the 2025 Exit Franchise Disclosure Document, no statement, questionnaire, or acknowledgment signed by a franchisee at the start of the franchise relationship can waive claims under state franchise law, including fraud claims, or disclaim reliance on franchisor statements. This specific provision overrides any other conflicting terms in any document related to the franchise agreement. This means that even if an Exit franchisee signs a document that seems to waive these rights, that waiver is not enforceable under the franchise agreement.
This protection is significant for prospective Exit franchisees because it ensures they retain their legal rights and recourse, particularly regarding potential misrepresentations or fraudulent inducement by the franchisor during the franchise sales process. State franchise laws are designed to protect franchisees, and this clause reinforces that protection by preventing unintentional or coerced waivers. Franchisees should still carefully review all documents and seek legal counsel to fully understand their rights and obligations, but this provision offers an additional layer of security.
This type of clause is not uncommon in franchise agreements, as many states have franchise laws that aim to protect franchisees from overreaching by franchisors. By explicitly stating that waivers of state franchise law claims are ineffective, Exit is aligning its agreement with these protective statutes. This can provide franchisees with greater confidence when entering into the franchise agreement, knowing that their fundamental legal rights are preserved.