Does the Belocal Transfer Agreement contemplate the extinguishment of claims unknown at the time of execution?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
e 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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Transfer Agreement does contemplate the extinguishment of claims unknown at the time of execution, particularly for transfers involving California residents. The agreement includes a waiver of rights and benefits under California Civil Code Section 1542, which generally protects creditors from unknowingly releasing claims.
Specifically, the Transfer Agreement states that the parties expressly acknowledge that the agreement is intended to include all claims, even those unknown or unsuspected at the time of execution, within its effect. This means that both the franchisor and the franchisee are agreeing to release each other from any potential claims they may not even be aware of when signing the agreement.
For a prospective Belocal franchisee, this clause has significant implications. By signing the Transfer Agreement, they are potentially giving up the right to pursue legal action against Belocal for issues that may arise in the future but are currently unknown. This could include hidden liabilities, undisclosed breaches of contract, or other unforeseen problems related to the franchise. Franchisees in Washington State should note that these waivers do not apply to claims arising under the Washington Franchise Investment Protection Act.