What is the effect of the covenant not to sue in the Belocal Transfer Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Covenant Not to Sue. Franchisee covenants and agrees for itself and for the Franchisee Related Parties not to bring or allow to be brought on behalf of itself or any Franchisee Related Party, any action, cause of action, suit, or other proceeding of any kind, which has accrued or which may ever accrue, whether based in the Constitution, common law or statute, contract, tort, or in equity, for actual or punitive damages or other relief, against Franchisor and/or the Releasees arising out of, resulting from, or in any manner related to the matters referenced in Section 1.
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- No Assignment of Claims. Franchisee represents and warrants for itself and the Franchisee Related Parties that it has not assigned or transferred, or purported to assign or transfer, to any person or entity, any Claims released under Section 1 of this Agreement, and agrees to indemnify, defend and hold the Releasees harmless from and against any and all Claims based on or arising out of any such assignment or transfer, or purported assignment or transfer, of any Claims, or any portion thereof or interest therein. Franchisee represents and warrants that, since the date of the Franchise Agreement, there has been no assignment or transfer, and no purported assignment or transfer, to any person or entity of the Franchise, the Franchise Agreement, or any rights or interests therein or in the Franchisee.
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- [OMIT FOR WASHINGTON FRANCHISEES; FOR USE IN STATES OTHER THAN WASHINGTON:] Full and Independent Knowledge. Franchisee represents that it has been represented by an attorney in connection with the preparation and review of this Agreement, that it has specifically discussed with its attorney the meaning and effect of this Agreement, and that it has carefully read and understands the scope and effect of each provision contained herein. Franchisee further represents that it does not rely and has not relied upon any representation or statement made by the Franchisor or, any of the Releasees or any of their representatives with regard to the subject matter, basis, or effect of this Agreement.
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- Compromise. Franchisee agrees for itself and the Franchisee Related Parties that the releases contained herein are the result of a compromise and shall never at any time or for any purpose be considered as an admission of liability or responsibility on the part of Franchisor or the Releasees regarding any matter.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the covenant not to sue within the Transfer Agreement means that the franchisee agrees not to bring any legal actions against Belocal or its related parties. This applies to any existing or future claims related to the matters outlined in Section 1 of the agreement, covering various legal grounds such as constitutional law, common law, statutes, contracts, torts, or equity. The covenant prevents the franchisee from seeking actual or punitive damages, or any other form of relief from Belocal. This ensures that once the transfer is complete, Belocal is protected from potential lawsuits arising from the franchisee's past operations or any issues related to the franchise agreement.
This provision also extends to the franchisee's assigns, heirs, representatives, agents, family members, and anyone else acting on their behalf. This broad coverage aims to prevent any indirect attempts to sue Belocal through related parties. The franchisee also warrants that they have not assigned or transferred any claims released under Section 1 to any other person or entity. If such an assignment or transfer has occurred, the franchisee agrees to indemnify, defend, and hold Belocal harmless from any claims arising from that assignment.
For franchisees in states other than Washington, the agreement includes an acknowledgment that the franchisee has been represented by an attorney, has discussed the meaning and effect of the agreement with their attorney, and understands the scope of each provision. This acknowledgment is intended to reinforce the voluntary nature of the agreement and to ensure that the franchisee is fully aware of their rights and obligations. The franchisee also confirms that they have not relied on any representations made by Belocal or its representatives regarding the agreement's subject matter, basis, or effect.
Belocal also states that the releases within the agreement are the result of a compromise and should not be considered an admission of liability or responsibility on Belocal's part regarding any matter. For transfers specifically in California, the parties waive rights under California Civil Code Section 1542, acknowledging they understand the implications of waiving claims they may not know exist at the time of signing the agreement. This comprehensive approach aims to provide Belocal with broad protection from future legal claims related to the franchise transfer.