In the All States M.E.D. Franchise Agreement, what is the effect of the General Release on the Franchisee's guarantors?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
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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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- THIS IS A SPECIFIC RELEASE GIVING UP ALL RIGHTS WITH RESPECT TO THE TRANSACTIONS OR OCCURRENCES THAT ARE BEING RELEASED UNDER THIS AGREEMENT.
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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
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 general release extends to the franchisee's guarantors. This means that when a franchisee signs a general release, it not only releases All States M.E.D. from claims the franchisee might have, but it also releases All States M.E.D. from claims that the franchisee's guarantors might have. This is a significant point for potential franchisees because it affects anyone who has guaranteed the franchisee's obligations.
The general release covers a broad range of claims, including those the franchisee or their guarantors could assert against All States M.E.D., its agents, employees, officers, directors, members, franchisees, successors, assigns, and affiliates. The release encompasses all claims, actions, causes of action, contractual rights, demands, damages, costs, loss of services, expenses, and compensation up to the date of the release. This waiver is comprehensive, giving up all rights related to the transactions or occurrences being released under the agreement.
However, there are some limitations to this release. For example, the release does not apply to liabilities arising under specific state franchise laws such as the California Franchise Investment Law, the California Franchise Relations Act, and similar laws in Indiana, Maryland, Michigan, Minnesota, North Dakota, Rhode Island, and Washington. Additionally, in North Dakota, the franchisee is not required to sign a general release upon renewal of the franchise agreement. Prospective franchisees should be aware of these exceptions and understand the full scope of the release they and their guarantors are agreeing to when signing the All States M.E.D. Franchise Agreement.