Must an All States M.E.D. franchisee execute a general release to transfer their franchise?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
titute a material breach of this Agreement. If Franchisee is in compliance with this Agreement, Franchisor's consent to such transfer shall be conditioned upon the satisfaction of the following requirements:
- (a) Franchisee has complied with the requirements in Section 19;
- (b) all obligations owed to Franchisor, and all other outstanding obligations relating to the Franchised Business, are fully paid and satisfied;
- (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;
- (d) the prospective transferee has satisfied Franchisor that it meets Franchisor's management, business and financial standards, and otherwise possesses the character and capabilities, including business reputation and credit rating, as Franchisor may require to demonstrate ability to conduct the Franchised Business;
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, a franchisee (and any transferring owners, if the franchisee is a business entity) must execute a general release to transfer their franchise. This release, similar to the one attached as Schedule 1, covers 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. These claims include those arising under federal, state, or local laws, rules, or ordinances, and any other issues related to the termination of the agreement or the transfer of the franchise. However, if a general release is prohibited, the franchisee must provide the maximum release allowed by law.
In addition to the franchisee, the prospective transferee must also execute a general release, similar to Schedule 1, against All States M.E.D. and its associated parties. This release covers any representations regarding the franchise or the business conducted, or any other matter made to the transferee by the franchisee. The franchisee must also provide All States M.E.D. with a complete copy of all contracts, agreements, and related documentation between the franchisee and the prospective transferee regarding the sale or transfer of the franchise.
This requirement ensures that All States M.E.D. is protected from potential legal claims arising from the former franchisee or the new transferee. It is a common practice in franchising to include such releases to provide legal clarity and protection during franchise transfers. A prospective franchisee should carefully review Schedule 1 to understand the full scope of the release and consult with an attorney to assess its implications.