Does the General Release in the All States M.E.D. Franchise Agreement release the Releasee from damages?
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
- Franchise Investment Law, Minnesota Franchise Act, North Dakota franchise laws, the Rhode Island Investment Act, and the Washington Franchise Investment Protection Act.
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 within the franchise agreement does release the Releasee from certain damages, but with specific limitations and exceptions. The standard release requires the franchisee to release the franchisor (Releasee) and its affiliates from all claims, actions, damages, and expenses that the franchisee could assert against them up to the date of the release. This includes a waiver of rights under California Civil Code §1542, which typically protects against releasing unknown claims. However, this release does not apply to liabilities arising under franchise investment laws of California, Indiana, Maryland, Michigan, Minnesota, North Dakota, Rhode Island, and Washington.
For prospective All States M.E.D. franchisees, this means that while they are giving up their rights to sue the franchisor for most issues, there are some statutory claims that they cannot waive. This is particularly important in states with strong franchise laws, as it provides some protection against franchisor misconduct. The FDD also includes addenda for North Dakota, Maryland and Rhode Island that modify the standard franchise agreement terms.
Specifically, the North Dakota addendum states that franchisees in North Dakota are not required to sign a general release upon renewal of the franchise agreement. The Maryland addendum clarifies that any general release required as a condition of renewal, sale, or transfer does not apply to any liability under the Maryland Franchise Registration and Disclosure Law. The Rhode Island addendum states that any restriction of choice of jurisdiction or venue is void with respect to franchisees governed under the laws of Rhode Island. Therefore, franchisees need to be aware of the specific state laws and how they modify the general release to understand their rights and obligations fully.