Does the release by the Transferor in the Belocal Transfer Agreement cover claims that are unknown or unsuspected?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Transferor and each Transferor Principal, for themselves and on behalf of all other persons or entities acting on any of their behalf or claiming under any of them ("Releasing Parties"), hereby irrevocably and unconditionally release, acquit, and forever discharge Franchisor, Franchisor's predecessors, parents, subsidiaries, and affiliates, their respective officers, directors, shareholders, partners, managers, members, agents, representatives, independent contractors, servants, employees, attorneys, accountants, guarantors, successors, and assigns, past and present, in their corporate and individual capacities, past and present, and all persons acting by, through, under or in concert with any of them ("Franchisor Releasees") or any of them, from all actions, causes of action, suits, debts, liens, obligations, promises, liabilities, claims, rights, demands, damages, controversies, losses, costs, and expenses (including attorneys' fees and costs actually incurred), known or unknown, suspected or unsuspected, fixed or contingent, which any of them now has, owns, holds, claims to have, claims to own, or claims to hold, or at any time heretofore had, owned, held, claimed to have, claimed to own, or claimed to hold (collectively, "claims") against each or any of the Franchisor Releasees, including but not limited to those arising out of or relating to the Franchise Agreement and the relationships created thereby, any other agreement between any Franchisor Releasee on the one hand and any Releasing Party on the other hand, and the offer or sale of the N2 publication franchise opportunity.
[INCLUDE THE FOLLOWING SENTENCE FOR TRANSFERS IN WASHINGTON ONLY: This release in paragraph 5(b) does not apply with respect to claims arising under the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder.]
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 Transfer Agreement includes a release by the Transferor that covers claims, whether known or unknown, suspected or unsuspected. This means that the Transferor, by signing the agreement, is giving up any right to sue Belocal for any reason, even if they are not currently aware of the basis for such a claim. This broad release is a standard practice in franchise transfer agreements to protect the franchisor from future liabilities related to the transferred franchise.
For franchisees in California, there is a specific waiver of rights under California Civil Code Section 1542, which states that a general release does not cover claims the creditor doesn't know or suspect exist at the time of signing. By including this waiver, Belocal ensures that the release extends to such unknown claims, further protecting them from future litigation. However, for franchisees in Washington, the release does not apply to claims arising under the Washington Franchise Investment Protection Act.
Prospective Belocal franchisees should carefully consider the implications of this release, as it could prevent them from pursuing legal action against Belocal in the future, even for issues that are not yet known. It is advisable to consult with an attorney to fully understand the scope and impact of this release before signing the Transfer Agreement. Franchisees should also be aware of the specific exceptions for claims under the Washington Franchise Investment Protection Act, if applicable.