For a Belocal franchise in California, what is the effect of the amendment on the waiver of claims in the Belocal Franchise Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
[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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the amendment to the franchise agreement for California franchisees includes a specific waiver of rights under California Civil Code Section 1542. This section states that a general release does not apply to claims the creditor is unaware of at the time of signing the release, which, if known, would have significantly altered the settlement with the debtor. The amendment requires California franchisees to expressly waive these rights, acknowledging they understand the implications of waiving claims they may not even know exist.
This means that as a Belocal franchisee in California, you are agreeing to release Belocal from any claims, even those you are currently unaware of, that could arise from the franchise agreement. This waiver is intended to be comprehensive, covering all claims, known or unknown, that the franchisee might have against Belocal. By signing the agreement, the franchisee assumes the risk of such unknown claims.
Furthermore, the amendment adds a statement ensuring that no agreement signed by the franchisee waives claims under any applicable state franchise law, including fraud in the inducement, or disclaims reliance on statements made by Belocal or its representatives. This provision supersedes any other conflicting terms in any document related to the franchise. However, the agreement also states that certain provisions, such as those requiring the application of Texas laws or those containing covenants not to compete extending beyond the franchise term, may not be enforceable under California law. Additionally, the agreement stipulates that California franchisees acknowledge the risk of discovering unforeseen claims after the agreement is executed and agree that the release applies to these claims.