Can a Ledgers franchisee disclaim reliance on statements made by a franchise seller?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
--------| | Schedule 2 | Automatic Bank Draft Authorization | | Schedule 3 | Telephone Number Assignment | | Schedule 4 | Lease Rider | | Schedule 5 | Release | | Schedule 6 | State Addenda to the Franchise Agreement |
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.
EXHIBIT A
STATE ADDENDA TO THE DISCLOSURE DOCUMENT AND FRANCHISE AGREEMENT
The following modifications are to Loyalty Business Services LLC d/b/a Ledgers Franchise Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain portions of the Franchise Agreement dated The provisions of this State Law Addendum to Franchise Disclosure Document and Franchise Agreement ("State Addendum") apply only to those persons residing or operating a Ledgers Franchised Business in the following states: Michigan, California, Illinois, Indiana, Maryland, Minnesota, New York, Rhode Island, Virginia, or Wisconsin.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, a franchisee cannot waive claims under state franchise law or disclaim reliance on statements made by the franchisor, franchise seller, or anyone acting on the franchisor's behalf. This protection is in place to prevent franchisees from unknowingly giving up their legal rights, especially regarding fraud in the inducement, which occurs when a franchisee is misled into signing the agreement due to false statements. This provision takes precedence over any conflicting terms in any document related to the franchise agreement. This protection applies to all franchisees, but certain states, such as Maryland, New York, Minnesota, and Washington, have additional specific regulations regarding waivers, releases, and acknowledgments to further protect franchisees.
For example, in Maryland, representations requiring a franchisee to release, waive, or act as an estoppel of liability are not intended to act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law. Similarly, Washington does not enforce provisions that conflict with franchise agreement limitations, and the state prohibits franchisors from restricting franchisees from soliciting or hiring employees of the franchisor or other franchisees. In New York, no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law or disclaim reliance on statements made by the franchisor or their representatives. Minnesota law also prohibits franchisors from requiring franchisees to assent to a general release.
These regulations ensure that franchisees are not pressured into relinquishing their rights through acknowledgments or questionnaires signed during the initial stages of the franchise relationship. The aim is to provide franchisees with legal recourse if they believe they were misled or defrauded. Prospective Ledgers franchisees should be aware of these protections and consult with an attorney to fully understand their rights under the franchise agreement and applicable state laws. This is particularly important in states with specific addenda that modify the standard franchise agreement to comply with local regulations.
Therefore, Ledgers franchisees are protected from unknowingly waiving their rights or disclaiming reliance on statements made by the franchisor or its representatives. This protection is reinforced by state-specific regulations that further limit the enforceability of waivers and releases, ensuring that franchisees retain their legal rights throughout the franchise relationship.