Does the Belocal agreement acknowledge the risk of unknown or unanticipated claims arising after the execution of the agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Franchisee acknowledges for itself and the Franchisee Related Parties that there is a risk that, subsequent to the execution of this Agreement, it will discover, incur, or suffer Claims which are unknown or unanticipated at the time this Agreement is executed, including, without limitation, unknown or unanticipated Claims which arose from, are based upon, or are related to the Franchise Agreement or some part or aspect thereof, which if known by Franchisee on the date this Agreement is being executed may have materially affected its decision to execute this Agreement.
- (b) Franchisee acknowledges and agrees for itself and the Franchisee Related Parties that by reason of the release contained in Section 1 above, it is assuming the risk of such unknown and unanticipated Claims; and agrees that its release of the Releasees contained in this Agreement applies thereto.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement includes an acknowledgment by the franchisee regarding the risk of discovering unknown or unanticipated claims after the agreement is signed. Belocal franchisees acknowledge that such claims could arise from or relate to the Franchise Agreement itself.
The agreement stipulates that franchisees assume the risk of these unknown and unanticipated claims due to the release contained within the agreement. This means that franchisees agree that the release they provide to Belocal applies even to claims they are not aware of at the time of signing the agreement.
However, this acknowledgment and assumption of risk do not apply to claims arising under the Washington Franchise Investment Protection Act for franchisees in Washington. For transfers in California, the agreement includes a waiver of rights and benefits under California Civil Code Section 1542, which relates to unknown claims. This waiver emphasizes that the agreement is intended to include all claims, even those not known or suspected at the time of execution, to the extent permitted by law.
Prospective Belocal franchisees should carefully consider the implications of these provisions, particularly the assumption of risk for unknown claims and the waiver of rights under California Civil Code Section 1542 (if applicable). It is advisable to consult with an attorney to fully understand the scope and potential impact of these clauses before signing the franchise agreement.