Does the Belocal Franchise Agreement require the franchisee to assume the risk of unknown and unanticipated claims?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
2. Unknown Claims.
- (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, franchisees acknowledge and agree to assume the risk of unknown or unanticipated claims that may arise after the execution of the Franchise Agreement. This includes claims related to the Franchise Agreement itself or any aspect of it.
Specifically, Belocal franchisees acknowledge that there is a risk they might discover, incur, or suffer claims that were unknown or unanticipated when the agreement was signed. These claims could potentially affect their decision to have entered into the agreement had they been aware of them at the time.
By agreeing to the release contained in Section 1 of the agreement, franchisees accept the risk of such unknown and unanticipated claims. This means that the release of claims against Belocal applies even to those claims that the franchisee is not aware of at the time of signing the agreement. This is a significant point for prospective franchisees to consider, as it limits their ability to pursue legal action against Belocal for issues that were not known or anticipated during the agreement's execution. Franchisees in California should also be aware of the specific waiver of rights under California Civil Code Section 1542, further emphasizing the assumption of risk for unknown claims. However, Washington franchisees should note that this general release does not apply to claims arising under the Washington Franchise Investment Protection Act.
Prospective Belocal franchisees should carefully review the release provisions within the Franchise Agreement and seek legal counsel to fully understand the implications of assuming the risk of unknown and unanticipated claims. Understanding the scope of this release is crucial before signing the agreement, as it can significantly impact the franchisee's rights and potential legal recourse against Belocal.