Does the Belocal Franchise Agreement include a covenant not to sue, preventing franchisees and related parties from bringing legal action against the franchisor?
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 Franchise Agreement includes a covenant not to sue. This provision requires the franchisee and their related parties to agree not to bring any legal action against Belocal or its releasees. This covers any type of legal proceeding, whether based on constitutional law, common law, statute, contract, tort, or equity, and applies to claims for actual or punitive damages. The covenant relates to matters referenced in Section 1 of the agreement.
This means a Belocal franchisee is giving up their right to sue Belocal under certain circumstances. This is a significant legal commitment, as it restricts the franchisee's ability to seek legal recourse against Belocal for issues arising from the franchise agreement. The franchisee also warrants that they have not assigned any claims released under Section 1 to any other party and agrees to indemnify Belocal against any claims arising from such assignments.
Furthermore, the agreement stipulates that the franchisee acknowledges they have been represented by an attorney, have discussed the meaning and effect of the agreement with their attorney, and understand the scope of each provision. The franchisee also represents that they have not relied on any representations made by Belocal or its representatives regarding the agreement. This clause emphasizes the importance of independent legal advice and due diligence before signing the agreement.
The covenant not to sue is presented as a compromise and should not be considered an admission of liability or responsibility on Belocal's part. Franchisees should carefully consider the implications of this provision and seek legal counsel to fully understand their rights and obligations under the Franchise Agreement.