Does the Belocal franchise agreement supersede prior representations made by franchised sellers?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
tters released in Sections 5.a. and 5.b
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- [OMIT FOR WASHINGTON FRANCHISEES; FOR USE IN STATES OTHER THAN WASHINGTON:] Acknowledgments Regarding Releases. By affixing their signatures to this Transfer Agreement, the parties acknowledge that they have carefully read and fully understand the provisions of this Agreement, including, specifically, the release of claims set forth in Sections 5.a. and 5.b. of this Agreement, and that their release of such claims is knowing and voluntary. Transferor and each Transferor Principal acknowledges that it has had a reasonable opportunity to consult with an attorney prior to executing this Transfer Agreement and that the execution of this Transfer Agreement is voluntary. Transferor and each Transferor Principal further acknowledge that Franchisor has advised them to consult with an attorney before executing this Transfer Agreement. Each party represents that it does not rely, and has not relied upon, any representation or statement made by any of the Franchisor Releasees or any of the Transferor Parties, as the case may be, or any of their representatives, with regard to the subject matter, basis, or effect of this Agreement.
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- Indemnity. The parties acknowledge and agree that except for those matters relative to its consent, Franchisor has neither exercised any influence over, nor has it taken any part in, the transfer of the Franchise Agreement or Franchisee's Business.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement addresses the issue of reliance on prior representations, particularly in the context of transfers and releases. Specifically, when a franchisee transfers their franchise, the transfer agreement includes acknowledgments that the parties are not relying on any prior representations made by the franchisor or transferor. This is emphasized for franchisees in states other than Washington. This acknowledgement is part of a broader release of claims, indicating that the parties are waiving rights to make claims based on previous statements or representations.
This provision has significant implications for prospective Belocal franchisees, especially those considering purchasing an existing franchise. It means that any promises, assurances, or representations made during the sales process by the previous franchisee (transferor) or the franchisor's representatives are not binding unless explicitly included in the written franchise agreement. A prospective franchisee cannot later claim they were misled by prior statements if they sign the transfer agreement acknowledging they did not rely on those statements.
However, the FDD also includes provisions that may limit the enforceability of such waivers, particularly in California. It states that no agreement signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor or its representatives. This suggests that while Belocal attempts to protect itself from prior representations, these protections may not hold up in all jurisdictions, especially where state laws provide stronger protections for franchisees.
Therefore, a prospective Belocal franchisee should carefully review the franchise agreement and any transfer agreements, ensuring that all important terms and conditions are explicitly included in writing. They should also consult with an attorney to understand the enforceability of waivers and releases in their specific state, especially concerning prior representations made during the franchise sales process. This is particularly important in states like California, where franchisee protections may override certain contractual provisions.