In the Belocal Franchise Agreement, what risk is the franchisee assuming regarding unknown and unanticipated claims by reason of the release contained in Section 1?
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, a franchisee acknowledges that there is a risk that after the Franchise Agreement is executed, they may discover, incur, or suffer claims that were unknown or unanticipated at the time of signing. These claims could arise from, be based upon, or be related to the Franchise Agreement itself.
The Belocal franchisee assumes the risk of these unknown and unanticipated claims because of the release contained in Section 1 of the agreement. By agreeing to the release, the franchisee accepts that it applies to these unknown claims. This means that even if a franchisee later discovers a claim they didn't know about when signing the agreement, they are still bound by the release and may not be able to pursue legal action against Belocal or related parties.
This is a significant risk for prospective Belocal franchisees. It is important to carefully consider the implications of this release and to seek legal advice before signing the Franchise Agreement. Franchisees should conduct thorough due diligence to identify any potential issues or concerns before committing to the franchise.
It is common practice in franchising to include releases of claims in franchise agreements. However, the scope and effect of these releases can vary. Some states, like Washington and New York, have specific laws that limit the enforceability of releases in franchise agreements. Prospective franchisees should be aware of the laws in their state and how they may affect their rights.