Can a Ledgers franchisee waive claims under state franchise law through an acknowledgement?
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.
CALIFORNIA
As to franchises governed by the California Franchise Investment Law, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination, transfer or non-renewal of a franchise. If the Franchise Agreement or Agreement contains provisions that are inconsistent with the law, the law will control.
The Franchise Agreement provide for termination upon bankruptcy. This provision may not be enforceable under Federal Bankruptcy Law (11 U.S.C.A. Sec. 101 et seq.).
The Franchise Agreement contain covenants not to compete which extend beyond the termination of the agreements. These provisions may not be enforceable under California law.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers's 2025 Franchise Disclosure Document, a franchisee cannot waive claims under state franchise law through any statement, questionnaire, or acknowledgment signed in connection with starting the franchise relationship. This includes claims related to fraud in the inducement. This provision overrides any other conflicting terms in the franchise documents. This protection is explicitly mentioned in the general contracts section and is further reinforced in state-specific addenda for Illinois, Maryland, Minnesota, and New York.
This non-waiver provision is a significant benefit for prospective Ledgers franchisees. It ensures that franchisees retain their rights under state franchise laws, even if they sign documents that appear to waive those rights. This is particularly important in states with strong franchise laws designed to protect franchisees from overreaching by franchisors. The inclusion of fraud in the inducement as a non-waivable claim provides an additional layer of protection, ensuring that franchisees can pursue legal remedies if they believe they were misled during the franchise sales process.
Several states, including California, Illinois, Minnesota, and New York, have specific franchise laws that provide additional protections to franchisees. The Ledgers FDD includes state-specific addenda that address how the franchise agreement interacts with these laws. For example, the California addendum notes that certain provisions of the franchise agreement, such as those related to termination upon bankruptcy or covenants not to compete, may not be enforceable under California law. Similarly, the New York addendum ensures that franchisees retain all rights and causes of action arising from Article 33 of the General Business Law of the State of New York.
For a prospective Ledgers franchisee, this means carefully reviewing the state addendum applicable to their state of residence or the location of their franchise. These addenda modify the standard franchise agreement to comply with state-specific franchise laws, providing additional rights and protections. The non-waiver provisions and state-specific addenda collectively create a legal framework that aims to protect franchisees and ensure a fair franchising relationship.