For a Belocal franchise in California, what is the effect of the amendment on the waiver of claims?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
or related to the Franchise Agreement.
[For California franchisees, add: Each of the Releasing Parties expressly waives and relinquishes all rights and benefits which either may now have or in the future have under and by virtue of California Civil Code Section 1542. The Releasing Parties do so understanding the significance and consequence of such specific waiver. Section 1542 provides that "[a] general release does not extend to claims which the creditor does not know or suspect exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." For the purpose of implementing a general release and discharge as described in Section 1 above, the Releasing Parties expressly acknowledge that this Agreement is intended to include in its effect, without limitation, all claims described in Section 1 above which the Releasing Parties do not know or suspect to exist in their favor at the time of execution hereof, and that this Agreement contemplates the extinguishment of any such claims.]
[FOR WASHINGTON FRANCHISEES, ADD: This General Release does not apply with respect to claims arising under the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder.]
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.
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- Covenant Not to Sue.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, there are specific stipulations regarding the waiver of claims for franchisees in California. The amendment includes a waiver of rights and benefits under California Civil Code Section 1542, which addresses claims unknown at the time of executing a release. This means that California franchisees are agreeing to release Belocal from claims they may not even be aware of when signing the agreement.
Specifically, California Civil Code Section 1542 states that a general release does not cover claims the creditor doesn't know or suspect exist, which, if known, would have significantly affected the settlement. However, the Belocal franchise agreement explicitly states that the parties intend to include all such unknown claims in the release. This implies that franchisees are consciously accepting the risk of waiving unknown claims.
Additionally, the amendment for California franchisees also includes a statement ensuring that no statement, questionnaire, or acknowledgment signed by the franchisee will waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by Belocal or its representatives. This provision is designed to supersede any other conflicting terms in the franchise agreement, offering some protection to the franchisee. However, franchisees should consult with legal counsel to fully understand the implications of waiving rights under Section 1542 and the extent to which their rights are protected under California law.