Under the Belocal Transfer Agreement, who is included in the definition of "Covenantors" for the covenant not to sue?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the parties hereto covenants and agrees for themselves and for their assigns, heirs, representatives, agents, family members, and all other persons acting on their behalf or claiming under them (collectively, "Covenantors") not to participate in, bring, or allow to be brought on behalf of any Covenantor, any action, cause of action, suit, or other proceeding of any kind, which has accrued or which may ever accrue, whether based in the Constitution, common law, or statute, contract, tort, or in equity, for actual or punitive damages or other relief, against one another arising out of, resulting from, or in any manner related to the matters released 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 term "Covenantors" in the context of the covenant not to sue includes several parties. Specifically, it encompasses the parties to the Transfer Agreement themselves, along with their assigns, heirs, representatives, agents, family members, and all other persons acting on their behalf or claiming under them. This definition is relevant to the covenant not to sue, meaning these individuals and entities agree not to bring any legal actions or proceedings against one another related to the matters released in specific sections of the Transfer Agreement.
This broad definition of "Covenantors" has significant implications for a prospective Belocal franchisee. It means that not only the franchisee but also a wide range of related individuals and entities are bound by the covenant not to sue. This could include family members involved in the business, employees, and any other representatives. The franchisee needs to ensure that all these parties are aware of and understand the implications of this covenant, as any legal action initiated by them could be a breach of the Transfer Agreement.
The inclusion of such a broad range of parties in the definition of "Covenantors" is not uncommon in franchise agreements, as franchisors aim to protect themselves from potential legal challenges from various sources connected to the franchisee. However, it is crucial for a prospective franchisee to carefully review this definition and understand its scope to avoid any unintended consequences. Franchisees should seek legal counsel to fully grasp the implications of this clause and ensure compliance.
In summary, the definition of "Covenantors" in the Belocal Transfer Agreement is extensive, covering a wide array of individuals and entities associated with the franchisee. This underscores the importance of thorough due diligence and legal consultation before entering into a franchise agreement to fully understand the obligations and potential liabilities involved.