What is the purpose of implementing a general release and discharge as described in Sections 5.a. and 5.b. of the Belocal Transfer Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
INCLUDE THE FOLLOWING PARAGRAPH FOR TRANSFERS IN CALIFORNIA ONLY:[c. The parties to this Transfer Agreement expressly waive and relinquish all rights and
benefits which any of them may now have or in the future have under and by virtue of California Civil Code Section 1542. Each party does 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 is 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 Sections 5.a. and 5.b., above, each party hereto expressly acknowledges that this Transfer Agreement is intended to include in its effect, without limitation, all claims described in Sections 5.a. and 5.b. above, which the parties do not know or suspect to exist in their favor at the time of execution hereof, and that this Transfer Agreement contemplates the extinguishment of any such claims.]
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the implementation of a general release and discharge in Sections 5.a. and 5.b. of the Transfer Agreement serves to waive and relinquish all rights and benefits under California Civil Code Section 1542 for transfers in California. This includes claims that the parties may not know or suspect to exist at the time of executing the agreement. The purpose is to ensure that the Transfer Agreement includes all claims described in Sections 5.a. and 5.b., effectively extinguishing any such claims, even those currently unknown.
For Belocal franchisees in California, this means they are agreeing to release all known and unknown claims against the franchisor related to the Franchise Agreement, any other agreements, or the offer and sale of the franchise. This waiver is made with the understanding that there may be unknown claims that could materially affect their settlement with the debtor. By signing the Transfer Agreement, the franchisee acknowledges and accepts the risk of such unknown claims.
However, it's important to note that for Belocal franchisees in Washington, the release in Section 5 does not apply to claims arising under the Washington Franchise Investment Protection Act, RCW 19.100, and its rules. This means that Washington franchisees retain their rights to pursue claims under this specific law, despite the general release. Prospective franchisees should carefully review these sections with an attorney to fully understand the implications of the release and discharge, especially concerning potential future claims.