In the All States M.E.D. Franchise Agreement, what is the effect of the General Release on the Franchisee's directors?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
(c) Franchisee (and any transferring owners, if Franchisee is a business entity) has executed a general release, in a form the same as or similar to the General Release attached as Schedule 1, of any and all claims against Franchisor, including its officers, directors, shareholders, managers, members, partners, owners, employees and agents (in their corporate and individual capacities), including, without limitation, claims arising under federal, state or local laws, rules or ordinances, and any other matters incident to the termination of this Agreement or to the transfer of Franchisee's interest herein or to the transfer of Franchisee's ownership of all or any part of the Franchise; provided, however, that if a general release is prohibited, Franchisee shall give the maximum release allowed by law;
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- Release- Franchisee and all of Franchisee's guarantors, members, officers, directors, employees, agents, successors, assigns and affiliates fully and finally release and forever discharge Releasee, its past and present agents, employees, officers, directors, members, Franchisees, successors, assigns and affiliates (collectively "Released Parties") from any and all claims, actions, causes of action, contractual rights, demands, damages, costs, loss of services, expenses and compensation which Franchisee could assert against Released Parties or any of them up through and including the date of this Release.
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- California Releasor- You represent and warrant that YOU EXPRESSLY WAIVE ANY AND ALL RIGHTS AND BENEFITS UNDER CALIFORNIA CIVIL CODE §1542, which provides as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
- The above Release shall not apply to any liabilities arising under the California Franchise Investment Law, the California Franchise Relations Act, Indiana Code § 23-2-2.5.1 through 23-2-2.7-7, the Maryland Franchise Registration and Disclosure Law, Michigan
General Release: Any requirement that the franchisee sign a general release upon renewal of the franchise agreement does not apply to franchise agreements covered under North Dakota law.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, the franchisee, including its directors, may be required to execute a general release of claims against All States M.E.D. as a condition of certain events, such as the termination of the franchise agreement or the transfer of the franchise. This release covers any and all claims against All States M.E.D., including its officers, directors, shareholders, managers, members, partners, owners, employees, and agents in both their corporate and individual capacities. The claims include those arising under federal, state, or local laws, rules, or ordinances, and any other matters related to the termination of the agreement or the transfer of the franchisee's interest.
This means that the franchisee, including its directors, gives up the right to sue All States M.E.D. for any reason covered by the release. This could include claims for breach of contract, negligence, fraud, or any other legal theory. The release is intended to protect All States M.E.D. from any potential liability arising from the franchise relationship. However, if a general release is prohibited by law, the franchisee is required to give the maximum release allowed by law.
It is important to note that the North Dakota Addendum to the Franchise Agreement states that a franchisee is not required to sign a general release upon renewal of the franchise agreement. Furthermore, the general release does not apply to any liabilities arising under specific state franchise laws such as the California Franchise Investment Law, the California Franchise Relations Act, Indiana Code, the Maryland Franchise Registration and Disclosure Law, Michigan Franchise Investment Law, Minnesota Franchise Act, North Dakota franchise laws, the Rhode Island Investment Act, and the Washington Franchise Investment Protection Act.
Prospective franchisees should carefully review the general release and consult with an attorney to understand the full scope of its implications. They should also be aware of any state-specific laws that may limit the enforceability of the release. Franchisees should also be aware that in California, they are waiving rights under California Civil Code §1542, regarding claims that are unknown at the time of signing the release.