Does the release by the Transferor in the Belocal Transfer Agreement extend to claims arising from any agreement between a Franchisor Releasee and a Releasing Party?
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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Transferor and each Transferor Principal, on behalf of all Releasing Parties, release Franchisor Releasees from all claims. This release includes claims arising out of or relating to the Franchise Agreement, the relationships created by it, any other agreement between any Franchisor Releasee and any Releasing Party, and the offer or sale of the N2 publication franchise opportunity. This means that the release extends to claims arising from any agreement between a Franchisor Releasee and a Releasing Party.
This is a broad release that has significant implications for a Belocal franchisee who is transferring their franchise. By signing the Transfer Agreement, the franchisee is giving up any right to sue Belocal or its affiliates for any reason, including breaches of contract, negligence, or fraud, except for claims arising under the Washington Franchise Investment Protection Act if the transfer occurs in Washington. This waiver applies to both known and unknown claims, meaning that a franchisee could be giving up rights they are not even aware of at the time of signing the agreement.
Belocal franchisees in California also expressly waive rights and benefits under California Civil Code Section 1542, acknowledging they understand they are relinquishing claims, even those unknown at the time of signing the transfer agreement. Belocal advises franchisees to consult with an attorney before executing the Transfer Agreement, highlighting the importance of understanding the implications of the release.
Franchise agreements commonly include release clauses to protect the franchisor from potential liabilities. However, franchisees should carefully review these clauses with legal counsel to fully understand the scope of the release and ensure they are not unknowingly giving up valuable rights. The breadth of this release in the Belocal Transfer Agreement underscores the need for thorough due diligence and legal advice before signing.