What consideration does Amorino provide in exchange for the franchisee's release and covenant not to sue?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) You and each of your Principals shall have executed a general release, in a form satisfactory to Amorino, of any and all claims against Amorino and its Affiliates and their respective officers, directors, shareholders, members, equity holders, agents and employees in their corporate/company and individual capacities, including claims arising under federal, state and local laws, rules and ordinances; provided, however, that any release will not be inconsistent with any state law regulating franchising.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to the 2025 Amorino FDD, in the context of a transfer of the franchise, the franchisee and their principals must execute a general release of claims against Amorino and its affiliates. However, the FDD does not explicitly state what specific consideration Amorino provides in exchange for this release.
Typically, in franchise agreements, a general release and covenant not to sue are exchanged for some form of consideration. This could include allowing the transfer to proceed, which benefits the franchisee by allowing them to sell the business. The FDD specifies several conditions that must be met for a transfer to be approved, such as the franchisee being up to date on all payments and obligations, and the transferee meeting Amorino's standards. The approval of the transfer itself can be seen as the consideration provided by Amorino.
It is important for a prospective franchisee to understand the implications of signing a general release. This means they are giving up any potential claims they may have against Amorino, which could be significant depending on the circumstances. Given the lack of explicit detail on the consideration provided, a prospective franchisee should seek clarification from Amorino regarding what specific benefits or considerations they will receive in exchange for signing the release. This ensures both parties are clear on their obligations and rights during the transfer process.