In Virginia, can a franchisee disclaim reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor when signing a statement, questionnaire, or acknowledgment in connection with the Kidokinetics franchise?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 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.
VIRGINIA
Item 17(h). The following is added to Item 17(h):
"Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to use undue influence to induce a franchise to surrender any right given to him under the franchise. If any provision of the Franchise Agreement or Supplemental Agreements involve the use of undue influence by the Franchisor to induce a franchisee to surrender any rights given to franchisee under the Franchise, that provision may not be enforceable."
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the FDD for Kidokinetics Franchise LLC for use in the Commonwealth of Virginia shall be amended as follows:
Additional Disclosure. The following statements are added to Item 8 and Item 17.h.
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a franchisee in Virginia cannot disclaim reliance on statements made by the franchisor, franchise seller, or anyone acting on their behalf. This protection applies to any statement, questionnaire, or acknowledgment signed in connection with starting the franchise relationship. This means that even if a franchisee signs a document that seems to waive their right to rely on previous statements, that waiver is not enforceable under Virginia law. This provision overrides any conflicting terms in any document related to the franchise agreement.
This safeguard is particularly important because it protects franchisees from potential misrepresentations or misleading statements made during the franchise sales process. It ensures that franchisees can hold Kidokinetics accountable for the information provided to them when they were deciding whether to invest in the franchise. This protection extends to claims of fraud in the inducement, meaning a franchisee can claim they were fraudulently persuaded to enter the agreement based on false information.
Furthermore, the FDD includes a specific addendum for Virginia, addressing Section 13.1-564 of the Virginia Retail Franchising Act. This section makes it unlawful for Kidokinetics to use undue influence to get a franchisee to surrender any rights granted to them under the franchise agreement. If any part of the Franchise Agreement or related Supplemental Agreements involves such undue influence, that specific provision may not be enforceable. This reinforces the protection against overreach by the franchisor and ensures franchisees retain their rights under Virginia law.
In addition to these protections, the Virginia addendum also addresses franchise termination. It states that it is unlawful for Kidokinetics to cancel a franchise without reasonable cause, and any termination grounds in the Franchise Agreement that do not meet the definition of "reasonable cause" under Virginia law may not be enforceable. These measures collectively aim to protect franchisees in Virginia from unfair practices and ensure they are treated fairly throughout the franchise relationship.