After entering into an All County franchise agreement, is a franchisee precluded from settling claims?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Reservation of Claims Against Non-Settling Parties. All County and Franchisee expressly reserve their right and claims against any non-settling persons, firms, corporations, or other entities for whatever portion or percentage their damages are found to be attributable to the wrongful conduct of said non-settling parties.
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- Release of Claims by Franchisee. In consideration of the other terms and conditions of this Agreement, the receipt and sufficiency of which is hereby acknowledged, Franchisee, for himself and for each of his heirs, executors, administrators, insurers, attorneys, agents, representatives, successors, and assigns, does hereby release and forever discharge All County and each of its respective affiliated corporations, subsidiaries, divisions, insurers, indemnitors, attorneys, successors, and assigns, together with all of their past and present directors, officers, employees, attorneys, agents, assigns and representatives in their capacities as such, of and from any and all actions, suits, proceedings, claims (including, but not limited to, claims for attorney's fees), complaints, charges, judgments, executions, whether liquidated or unliquidated, known or unknown, asserted or unasserted, absolute or contingent, accrued or not accrued, related to the Franchise Agreement.
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- Any general release required in the Franchise Agreement as a condition of renewal, sale, and/or assignment or transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
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- 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.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, a franchisee is not entirely precluded from settling claims. The document outlines conditions and reservations regarding claim settlements. Specifically, both All County and the franchisee retain their rights and claims against non-settling parties, allowing them to pursue legal action against entities not involved in the settlement for the portion of damages attributable to those parties' wrongful conduct. This ensures that neither party forfeits their ability to seek recourse from other responsible entities. However, in Maryland, any general release required in the Franchise Agreement as a condition of renewal, sale, and/or assignment or transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law. Also in Maryland, 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.
All County's FDD includes a 'Release of Claims' agreement where the franchisee releases All County from any and all actions, suits, proceedings, claims, complaints, charges, judgments, and executions related to the Franchise Agreement. This release covers a broad range of potential claims, whether known or unknown, accrued or not accrued. However, this release is contingent upon the terms and conditions of the agreement, suggesting that specific conditions must be met for the release to be valid.
In practical terms, a prospective All County franchisee should carefully review the terms and conditions related to claim releases to understand the full scope of their rights and obligations. They should also be aware of the reservation of claims against non-settling parties, which allows for recourse against other entities. Franchisees operating in Maryland should be aware of the stipulations in the addendum to the All County Franchise Disclosure Document for the State of Maryland.