Under California's Franchise Investment Law, can Mrcool disclaim representations made to a franchisee?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
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- California's Franchise Investment Law (Corporations Code Sections 31512 and 31512.1) states that any provision of a franchise agreement or related document requiring the franchisee to waive specific provisions of the law is contrary to public policy and is void and unenforceable. The law also prohibits a franchisor from disclaiming or denying (i) representations it, its employees or its agents make to you, (ii) our ability to rely on any representations it makes to you, or (iii) any violation of the law.
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- No statement, questionnaire or acknowledgement 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 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, California's Franchise Investment Law protects franchisees from franchisors disclaiming representations made to them. Specifically, Mrcool is prohibited from disclaiming or denying representations made by the company, its employees, or agents to the franchisee. The law also prevents Mrcool from denying a franchisee's ability to rely on any representations Mrcool makes and any violation of the law. This ensures that franchisees can hold Mrcool accountable for the claims and promises made during the franchise sales process.
Furthermore, any provision in the franchise agreement that requires a franchisee to waive specific provisions of California's Franchise Investment Law is considered against public policy and is void and unenforceable. This means Mrcool cannot include clauses that force franchisees to give up their legal rights under the law. Additionally, any statement, questionnaire, or acknowledgment signed by a franchisee cannot waive claims under state franchise law, including claims of fraud in the inducement, or disclaim reliance on statements made by Mrcool or anyone acting on its behalf. This provision takes precedence over any conflicting terms in any document related to the franchise agreement.
To further comply with California law, Mrcool has amended its franchise agreement. Specifically, Mrcool has deleted Article 18.Q from the agreement. Additionally, the following statement has been removed from Article 18.R of the Franchise Agreement: "The foregoing shall not be construed to imply that Franchisor and/or Franchisor's agents have made any oral promises as pursuant to Article 18.M. of this Agreement, this written Agreement represents the sole Agreement between Franchisor and Franchisee." Section 7.15 of the Multi-Unit Development Agreement has also been deleted. These changes ensure that the franchise agreement aligns with California's regulations and protects the rights of Mrcool franchisees in California.