Is the Exit franchisee required to determine compliance with franchising laws before executing the agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
43. STATEMENTS, QUESTIONNAIRES AND ACKNOWLEDGMENTS
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.
- (B) ILLINOIS.
If this Agreement is governed by the laws of the State of Illinois, then: (1) the acknowledgments made by Franchisee in Section 41 are not allowed under the Illinois Franchise Disclosure Act and (2) any provision of this Agreement which designates jurisdiction or venue outside of the State of Illinois is void
- (C) INDIANA.
If this Agreement is governed by the laws of the State of Indiana, then: (1) the geographical limitation contained in Section 21 will be limited to within the Protected Territory; (2) Section 21 which states Subfranchisor is entitled to injunctive relief may be inapplicable; rather, Subfranchisor is entitled to seek injunctive relief; (3) notwithstanding any provisions of this Agreement to the contrary, a court of competent jurisdiction will determine (a) whether damages alone can adequately compensate Subfranchisor if there is a violation by Franchisee, Franchisee's shareholders or the partners or members, as the case may be, and (b) whether Subfranchisor will be required to post a bond or other security, and the amount of such bond or other security, in any injunctive proceeding commenced by Subfranchisor against Franchisee, Franchisee's shareholders or the partners or members, as the case may be.
- (D) MARYLAND.
If this Agreement is governed by the laws of the State of Maryland, then: (1) the acknowledgments made by Franchisee contained in Section 41 of this Agreement will not be construed to act as a waiver of Franchisee's rights under the Maryland Franchise Registration and Disclosure Law, Md.
Code Ann., Bus.
Reg. § 14-201 et seq.; and (2) the releases from liability and waivers described in Md.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
Based on the 2025 Exit Franchise Disclosure Document, the franchisee is not explicitly required to determine compliance with franchising laws before executing the agreement. However, the document does include provisions related to statements, questionnaires, and acknowledgments, ensuring that franchisees do not waive rights under applicable state franchise laws or disclaim reliance on statements made by the franchisor. This suggests that Exit aims to protect franchisees from unknowingly relinquishing their legal rights during the franchise commencement.
Several sections of the agreement address legal considerations and compliance within specific states. For instance, the FDD notes that if the agreement is governed by the laws of California, Illinois, Indiana, or Maryland, certain provisions may be unenforceable or subject to specific interpretations under those states' franchise laws. These clauses indicate that Exit acknowledges the importance of state-specific franchise regulations and tailors the agreement to align with them.
While the FDD does not mandate that franchisees independently verify legal compliance, it does include provisions that protect franchisees' rights and acknowledge state-specific franchise laws. A prospective Exit franchisee should consult with a legal professional to fully understand their rights and obligations under the franchise agreement and applicable state laws, ensuring they are well-informed before signing the agreement.