Waiver is the voluntary relinquishment or intentional surrender of a known right, claim, or privilege under the Franchise Agreement. In franchising, a Waiver often occurs when a franchisor chooses not to enforce a contractual provision or when a franchisee signs a document releasing certain rights. However, Waivers must be clearly expressed and are generally interpreted narrowly under law.
In franchising, a Waiver refers to the intentional decision by either the franchisor or franchisee to forgo the enforcement of a specific legal or contractual right. For example, a franchisor might waive a late fee, reporting requirement, or default remedy. Conversely, a franchisee may sign a Waiver releasing the franchisor from liability claims or future disputes. Most Franchise Agreements include a “No Waiver” clause stating that failure to enforce a right does not permanently waive it, thereby preserving the franchisor’s authority to act later. Legally, a valid Waiver must be voluntary, made with full knowledge of the right being surrendered, and clearly documented. Courts tend to construe Waivers narrowly, particularly when they affect statutory or franchisee protection rights.
Additional Definition: In a typical franchise agreement, there is an “anti-waiver” clause, which states that one party’s acceptance of late performance or non-performance of an obligation by the other party does not waive the requirement that the same obligation be met in the future.
The concept of Waiver is rooted in contract and equity law, where parties may intentionally relinquish rights to promote fairness or efficiency. In the franchise context, Waivers became especially important during the 1970s as state franchise laws began regulating franchisor conduct. Some franchisors attempted to include broad Waivers limiting franchisee legal remedies, but many state laws now prohibit such provisions as unenforceable or against public policy. Today, Waivers are most commonly used to address specific events—such as temporary noncompliance or negotiated settlements—rather than as blanket releases of franchisee rights. Courts continue to evaluate each Waiver based on clarity, fairness, and voluntariness.
Also See: The Educated Franchisee, 3rd Edition
From a legal standpoint, Waivers serve as both a risk management tool and a potential source of dispute. Franchisors use them to temporarily excuse noncompliance or resolve issues without litigation, while franchisees may use them to negotiate concessions or settle claims. However, state and federal franchise laws often limit the enforceability of certain Waivers—especially those that attempt to waive statutory protections, disclosure rights, or remedies under the FTC Franchise Rule. In some jurisdictions, any attempt by a franchisor to require such a Waiver may be deemed void or an unfair trade practice. Therefore, both parties must exercise caution and obtain legal counsel before agreeing to or relying upon any Waiver.
| Type of Waiver | Description |
|---|---|
| Performance Waiver | Temporary forgiveness of a franchisee’s failure to meet sales or operational targets. |
| Payment Waiver | Franchisor’s decision to suspend or forgive late fees or royalty payments. |
| Default Waiver | Franchisor’s choice not to enforce a default despite breach of the Franchise Agreement. |
| Disclosure Waiver | Attempt to waive disclosure requirements under the Franchise Rule (generally prohibited). |
| Litigation or Claims Waiver | Franchisee releases the franchisor from liability as part of a settlement or agreement. |
| Transfer or Renewal Waiver | Franchisor permits a transfer or renewal despite unmet contractual conditions. |
| Jurisdiction | Restriction |
|---|---|
| Federal (FTC Franchise Rule) | Prohibits franchisors from requiring franchisees to waive rights granted under the Rule. |
| California | Franchisees cannot waive rights under the California Franchise Relations Act or Franchise Investment Law. |
| Illinois | Any waiver of rights under the Illinois Franchise Disclosure Act is void as against public policy. |
| Minnesota | Franchisees cannot waive protections afforded under state franchise statutes. |
| New York | Prohibits Waivers that release franchisors from liability for fraud or statutory violations. |
'The franchisor issued a written Waiver excusing late royalty payments during the natural disaster period.'
'A franchisee cannot legally sign a Waiver relinquishing rights protected under the FTC Franchise Rule.'
'Failure to enforce a provision once does not constitute a permanent Waiver of the franchisor’s rights.'
| Category | Waiver | Release |
|---|---|---|
| Definition | Voluntary decision not to enforce a right or claim. | Formal agreement relinquishing existing or potential legal claims. |
| Timing | Occurs before or during a contractual obligation. | Usually occurs after a dispute or breach has arisen. |
| Form | May be written or implied by conduct. | Must be written and signed by the releasing party. |
| Effect | Temporary or limited in scope. | Permanent and comprehensive. |
| Use in Franchising | Used to excuse minor noncompliance or modify obligations. | Used in settlements or when terminating franchise relationships. |
A Waiver in franchising is the voluntary decision to give up or not enforce a contractual or legal right. While Waivers offer flexibility in managing franchise relationships, they must be clear, specific, and compliant with state and federal laws to avoid unintended loss of rights or violations of public policy.
