For Stretch Zone franchisees subject to franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin, can they waive claims under applicable state franchise law, including fraud in the inducement?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
The following provision applies only to franchisees and franchises that are subject to the state franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin:
No statement, questionnaire, or acknowledgement signed or agreed to by 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 Franchisor, any franchise seller, or any other person acting on behalf of Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, franchisees in certain states are protected from waiving their rights under state franchise laws. Specifically, for franchisees subject to franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin, any statement, questionnaire, or acknowledgement signed in connection with starting the franchise cannot waive claims under applicable state franchise law. This explicitly includes claims related to fraud in the inducement.
This provision ensures that Stretch Zone franchisees in these states retain their legal rights and protections under state franchise laws, regardless of any agreements or acknowledgements they may sign. It prevents Stretch Zone from enforcing waivers that could limit a franchisee's ability to pursue legal claims, especially those related to misrepresentation or fraud during the franchise sales process.
This protection is significant because it addresses the power imbalance that can exist between franchisors and franchisees. Franchisees often rely on the franchisor's representations when deciding to invest in a franchise, and this clause prevents Stretch Zone from using waivers to shield themselves from liability for misleading statements. This ensures that franchisees in the specified states have recourse if they believe they were induced into the franchise agreement through fraudulent means.
It is important to note that this provision only applies to franchisees in the states listed. Franchisees in other states may be subject to different rules regarding waivers and disclaimers. This difference highlights the importance of consulting with legal counsel to understand the specific franchise laws in your state and how they apply to your franchise agreement with Stretch Zone.