December 02, 2025|Franchise Frontlines
June 12, 2025 | West Virginia Intermediate Court of Appeals | Published Decision
Executive Summary
In Ameriprise Financial, Inc. v. Vallandingham, 2025 WL 1661539 (W. Va. Interm. Ct. App. June 12, 2025), the West Virginia Intermediate Court of Appeals reversed a trial court judgment that had found Ameriprise liable for allegedly fraudulent inducement in connection with a franchisee’s purchase of another advisor’s practice. The appellate court held that the franchisee expressly waived and released any such claim under a Consent and Release Agreement tied to the transfer approval process. The court concluded that the release was clear, unambiguous, enforceable, and neither procedurally nor substantively unconscionable. It further emphasized that the Due Diligence and Release Clauses were non-reliance provisions that barred claims premised on outside representations. The judgment was reversed in full, providing significant guidance for franchisors who condition practice transfers, resales, or internal succession approvals on release agreements.
Relevant Background
According to the allegations, Ameriprise Financial, Inc. operates a national financial-advisor franchise system, contracting with independent advisors who sell financial products under the Ameriprise brand. The respondent, a long-time franchisee and certified financial planner, had operated an Ameriprise franchise since 1999 and had amassed more than 200 clients and over $20 million in assets under management.
In 2009, after another advisor’s franchise was terminated, the respondent sought to purchase that advisor’s “practice,” a term Ameriprise and the parties used for the book of clients associated with a franchise. Before purchasing, the franchisee contacted an Ameriprise vice president with questions about the seller’s practice. The vice president allegedly stated there was “nothing else [the franchisee] needed to know” about the pending transaction. The franchisee proceeded with the purchase.
The purchase required Ameriprise’s written approval under the parties’ Independent Advisor Franchise Agreement. As part of that approval, Ameriprise, the respondent, and the selling advisor executed a “Consent to Transition Agreement and Release of Claims.” The Consent and Release expressly stated that the franchisee had “conducted any due diligence or investigation he/she deems appropriate,” had “not relied upon any representation or action by Ameriprise,” and was releasing “all rights or claims, known or unknown… relating to or arising from the negotiation of, execution of, implementation of, or performance by the Transferring Advisor of any obligation under the Transition Agreement.”
Shortly after assuming responsibility for the practice, the franchisee identified what he perceived to be concerns about the seller’s prior client interactions and alleged compliance issues. When the seller sued him for breach of the purchase agreement, the franchisee filed a third-party complaint against Ameriprise asserting negligence, breach of contract, unjust enrichment, and fraudulent inducement.
The matter proceeded to a nine-day bench trial. The circuit court found that Ameriprise had fraudulently induced the franchisee to enter the transaction and awarded approximately $1.32 million in damages. Ameriprise appealed, arguing the Consent and Release barred the claim.
Decision
The appellate court reversed, holding that the franchisee waived his fraud claim through the Consent and Release. It began by reaffirming that West Virginia courts enforce unambiguous contracts, stating: “A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.” Ameriprise, 2025 WL 1661539, at *6 (quoting Syl. Pt. 3, Miller v. WesBanco Bank, Inc., 245 W. Va. 363, 859 S.E.2d 306 (2021)).
The court explained that the Consent and Release contained two critical components: a Due Diligence Clause and a Release Clause. The Due Diligence Clause stated that the franchisee “has independently entered into the [Buy/Sell] Agreement, has conducted any due diligence or investigation he/she deems appropriate, has made an independent assessment… and has not relied upon any representation or action by Ameriprise in deciding to enter into the [Buy/Sell] Agreement.” Id. at *7. The court emphasized that this clause was not a merger clause but a non-reliance clause, the type of clause that “specifically disclaims the parties’ reliance on outside representations… and therefore bar[s] misrepresentation claims, including fraud.” Id. (citing In re Marine Energy Sys. Corp., 299 F. App’x 222, 228–32 (4th Cir. 2008)).
Turning to the Release Clause, the court quoted it at length: the franchisee released “all rights or claims, known or unknown, he/she has or may have now to any relief of any kind from Ameriprise… relating to or arising from the negotiation of, execution of, implementation of, or performance by the Transferring Advisor of any obligation under the Transition Agreement.” Id. at *7. The court concluded that “this language plainly contemplates a fraud claim like the one at issue,” because the alleged misrepresentation directly concerned the negotiation and approval of the purchase. Id. at *7–8.
In rejecting the trial court’s contrary view, the appellate court explained that the lower court had mischaracterized the Due Diligence Clause as a merger clause, relying on Traders Bank v. Dils, 226 W. Va. 691, 704 S.E.2d 691 (2010). The appellate court clarified that merger clauses do not bar fraud claims, but non-reliance clauses do, quoting federal authority explaining that “the purpose of such a clause is to head off a suit for fraud.” Ameriprise, 2025 WL 1661539, at *6 (quoting Extra Equipamentos E Exportacao Ltda. v. Case Corp., 541 F.3d 719, 724 (7th Cir. 2008)).
The court then rejected the franchisee’s interpretive arguments, including the suggestion that the phrase “by the Transferring Advisor” modified all earlier verbs in the Release Clause. Applying the series-qualifier canon, the court explained that such a reading “would require a forced and unnatural reading of the structure of this series.” Id. at *8 n.8.
Addressing unconscionability, the court held the Consent and Release was neither procedurally nor substantively unconscionable. Procedurally, the franchisee was a “sophisticated party” who had been a franchisee for nearly a decade, was a certified financial planner, managed substantial client assets, and had previously executed a similar release. The agreement was only two pages and “neither… complicated nor hidden.” Id. at *10.
Substantively, the court found the terms “eminently reasonable.” Id. at *11. Ameriprise agreed to waive its right of first refusal and consent to the transfer—both valuable rights—in exchange for the release. The court emphasized that the franchisee had contracted to perform his own due diligence, consistent with West Virginia law recognizing that buyers who undertake their own investigation are deemed to rely on that investigation. Id. (citing Syl. Pt. 5, in part, Cordial v. Ernst & Young, 199 W. Va. 119, 483 S.E.2d 248 (1996)).
Finally, the court found that public policy supported enforcement. West Virginia’s public policy favors “freedom of contract,” especially for “sophisticated parties dealing at arm’s length.” Id. at *11–12. The court contrasted this case with securities transactions—where different public policy considerations apply—emphasizing that the franchisor did not sell securities to the franchisee and therefore no conflicting regulatory regime was implicated. Id. at *12 n.12.
Because the Consent and Release unambiguously waived the franchisee’s fraud claim and was enforceable under West Virginia law, the appellate court reversed the $1.32 million judgment in full.
Looking Forward
This decision reinforces important principles for franchisors that regularly approve practice sales, franchise transfers, or internal successions. The court’s analysis demonstrates that carefully drafted release and non-reliance provisions may substantially reduce the risk of post-transaction disputes when executed in conjunction with a franchisor’s approval rights. When franchisees acknowledge they have performed their own due diligence and have not relied on franchisor representations in entering a transaction, courts are more willing to enforce those provisions in the event of later disagreements.
The ruling also underscores the importance of ensuring that transfer-related documents are concise, clearly worded, and conspicuous. Here, the Consent and Release was only two pages, contained a direct statement of consideration, and expressly linked the release to the franchisor’s approval of the transfer. Courts may view such clarity as evidence that franchisees understood the rights they were relinquishing. The franchisee’s sophistication, business experience, and prior use of similar forms further strengthened the enforceability of the release.
Additionally, the court’s discussion of unconscionability provides guidance for franchisors structuring internal acquisition programs. While adhesion contracts are common in franchising, they are not automatically unconscionable. When the parties engage in transactions involving business assets, and the franchisee has meaningful experience and access to due diligence opportunities, courts may uphold agreements that formalize the allocation of risk between franchisor and franchisee. This may be particularly relevant when franchisors facilitate practice transitions, resales, or internal transfers in regulated industries where they cannot lawfully disclose certain internal compliance information without the selling franchisee’s consent.
Finally, the decision offers franchisors an opportunity to revisit their policies regarding approval of franchise transfers. Ensuring that release agreements clearly articulate the parties’ understanding of the franchisor’s limited role in transactions between franchisees can help mitigate exposure to claims arising from alleged nondisclosures or misunderstandings. As this case illustrates, when franchise systems require franchisees to perform their own due diligence and disavow reliance on franchisor statements, courts may be more inclined to respect those limitations and enforce release agreements as written.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
