If a Belocal franchisee assigns a claim released under Section 1, what is their obligation?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- No Assignment of Claims. Franchisee represents and warrants for itself and the Franchisee Related Parties that it has not assigned or transferred, or purported to assign or transfer, to any person or entity, any Claims released under Section 1 of this Agreement, and agrees to indemnify, defend and hold the Releasees harmless from and against any and all Claims based on or arising out of any such assignment or transfer, or purported assignment or transfer, of any Claims, or any portion thereof or interest therein. Franchisee represents and warrants that, since the date of the Franchise Agreement, there has been no assignment or transfer, and no purported assignment or transfer, to any person or entity of the Franchise, the Franchise Agreement, or any rights or interests therein or in the Franchisee.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee is responsible for protecting Belocal from any claims arising from the assignment or transfer of claims released under Section 1 of the General Release. Specifically, the franchisee must indemnify, defend, and hold harmless the 'Releasees' (which includes Belocal and its affiliates) against any claims that arise due to the assignment or attempted assignment of these released claims. This means the franchisee is legally and financially responsible for any costs, damages, or legal fees Belocal incurs as a result of such an assignment.
This obligation is outlined in the 'No Assignment of Claims' section within the General Release form. The franchisee also warrants that they have not assigned or transferred any claims released under Section 1. This warranty reinforces the franchisee's commitment to not undermine the release by assigning the claims to someone else who might then pursue them against Belocal. The franchisee's responsibility extends to all 'Franchisee Related Parties,' which includes a wide range of individuals and entities associated with the franchisee, ensuring comprehensive protection for Belocal.
For a prospective Belocal franchisee, this clause highlights the importance of understanding the scope of the General Release and ensuring that no claims covered by the release are assigned to third parties. Failure to comply with this provision could result in significant financial liabilities for the franchisee, as they would be responsible for defending Belocal against any claims arising from such assignments. This is a standard practice in franchising, where franchisors seek to protect themselves from potential liabilities through comprehensive release agreements and restrictions on claim assignments.