What California Civil Code section is expressly waived in the Belocal Transfer Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
[c. The parties to this Transfer Agreement expressly waive and relinquish all rights and
benefits which any of them may now have or in the future have under and by virtue of California Civil Code Section 1542. Each party does so understanding the significance and consequence of such specific waiver. Section 1542 provides that "[a] general release does not extend to claims which the creditor does not know or suspect exist in his favor at the time of executing the release, which is known by him must have materially affected his settlement with the debtor." For the purpose of implementing a general release and discharge as described in Sections 5.a. and 5.b., above, each party hereto expressly acknowledges that this Transfer Agreement is intended to include in its effect, without limitation, all claims described in Sections 5.a. and 5.b. above, which the parties do not know or suspect to exist in their favor at the time of execution hereof, and that this Transfer Agreement contemplates the extinguishment of any such claims.]
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the parties to the Transfer Agreement, if in California, expressly waive rights and benefits under California Civil Code Section 1542. This waiver means that the parties are giving up their rights to claims they may not even know exist at the time of signing the agreement.
Specifically, Section 1542 states that a general release does not extend to claims that a creditor is unaware of, but if known, would have significantly impacted their settlement with the debtor. By waiving this section, Belocal franchisees acknowledge that the Transfer Agreement encompasses all claims, even those not known or suspected at the time of execution, effectively extinguishing any future claims related to the matters outlined in Sections 5.a. and 5.b of the agreement.
This waiver is significant because it means a transferring Belocal franchisee cannot later claim they were unaware of certain issues or liabilities related to the franchise at the time of the transfer. It is crucial for franchisees to fully understand the implications of this waiver and to conduct thorough due diligence before signing the Transfer Agreement, as they are giving up potential future claims. Belocal franchisees should seek legal counsel to fully understand the rights they are relinquishing.