factual

Does the Big O Tires agreement confer any rights or remedies to third-party beneficiaries?

Big_O_Tires Franchise · 2025 FDD

Answer from 2025 FDD Document

o or in explanation of the existing terms and agreements of the Primary Agreement, a copy of which is attached hereto and made a part hereof as Exhibit A, and shall prevail over and supersede any inconsistent terms thereof.

    1. Release of BIG O by ASSIGNOR. [Type Franchisee Name of Seller], a [Type State of Organization and Type of Entity, [Type Name of all Guarantors who signed Schedule 3s], as Guarantors, jointly and individually, for themselves, their heirs, successors and assigns, past or present shareholders, predecessors, parents, subsidiaries or related corporations or entities, shall as of the Closing Date release and forever discharge BIG O, and any and all of its past or present directors, shareholders, predecessors, successors, parents, subsidiaries, agents, officers, employees, representatives, related corporations or entities and any and all persons acting by, through, under or in concert with them, or any of them (the "BIG O Parties"), of and from any and all claims, damages, costs, expenses, liabilities, actions, rights and causes of action of whatsoever kind and nature (collectively "Claims") by reason of any matter or cause whatsoever arising out of or in any way connected to the Franchise Agreements or the franchise relationships created thereby with regard to the Big O Tires Store and/or the operation thereof, whether such Claims exist now or hereafter arise.
    1. Release of BIG O by ASSIGNEE. [Type Franchisee Name of Buyer], a [Type State of Organization and Type of Entity, [Type Name of all Guarantors who signed Schedule 3s] ,as Guarantors, jointly and individually, for themselves, their heirs, successors and assigns, shareholders, predecessors, parents, subsidiaries or related corporations or entities, shall as of the Closing Date release and forever discharge the BIG O, and any and all of its past or present directors, shareholders, predecessors, successors, parents, subsidiaries, agents, officers, employees, representatives, related corporations or entities and any and all persons acting by, through, under or in concert with them, or any of them (the "BIG O Parties"), of and from any and all claims, damages, costs, expenses, liabilities, actions, rights and causes of action of whatsoever kind and nature (collectively "Claims") by reason of any matter or cause whatsoever arising out of or in any way connected to the operation of the Big O Tires Store, the actions and transactions contemplated in the Primary Agreement and this Agreement, any other representation and agreements between them and the ASSIGNOR and as to the related asset transfers, whether such Claims exist now or hereafter arise.

The following provision applies for any ASSIGNORS, ASSIGNEES, and Guarantors of an ASSIGNOR or ASSIGNEE in California:

It is intended that this Agreement shall be effective as a bar to each and every action and cause of action related to the released claims, whether known or unknown, foreseen or unforeseen, suspected or unsuspected, that each party may have against the BIG O Parties and each party expressly waives any and all rights under Section 1542 of the California Civil Code, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR

RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

The following provision applies for any ASSIGNORS, ASSIGNEES, and Guarantors of an ASSIGNOR or ASSIGNEE in Montana:

It is intended that this Agreement shall be effective as a bar to each and every action and cause of action related to the released claims, whether known or unknown, foreseen or unforeseen, suspected or unsuspected, that each party may have against the BIG O Parties and each party expressly waives any and all rights under Section 28-1-1602 of the Montana Code Annotated, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN THE CREDITOR'S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY THE CREDITOR, MUST HAVE MATERIALLY AFFECTED THE CREDITOR'S SETTLEMENT WITH THE DEBTOR.

The following provision applies for any ASSIGNORS, ASSIGNEES, and Guarantors of an ASSIGNOR or ASSIGNEE in North Dakota:

It is intended that this Agreement shall be effective as a bar to each and every action and cause of action related to the released claims, whether known or unknown, foreseen or unforeseen, suspected or unsuspected, that each party may have against the BIG O Parties and each party expressly waives any and all rights under Section 9-13-02 of the North Dakota Century Code, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN THE CREDITOR'S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY THE CREDITOR, MUST HAVE MATERIALLY AFFECTED THE CREDITOR'S SETTLEMENT WITH THE DEBTOR.

The following provision applies for any ASSIGNORS, ASSIGNEES, and Guarantors of an ASSIGNOR or ASSIGNEE in South Dakota:

It is intended that this Agreement shall be effective as a bar to each and every action and cause of action related to the released Claims, whether known or unknown, foreseen or unforeseen, suspected or unsuspected, that each party may have against the BIG O Parties and each party expressly waives any and all rights under Section 20-7-11 of the South Dakota Codified Laws, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

The following provision applies for any ASSIGNORS, ASSIGNEES, and Guarantors of an ASSIGNOR or ASSIGNEE in Washington:

This release does not apply with respect to any claims under the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder.

  1. Indemnification.

Source: Item 23 — RECEIPTS (FDD pages 102–535)

What This Means (2025 FDD)

Based on the 2025 Big O Tires Franchise Disclosure Document, the franchise agreement does not explicitly confer rights or remedies to third-party beneficiaries. However, the agreement includes provisions regarding indemnification and releases that affect third parties. Specifically, franchisees agree to indemnify Big O Tires against third-party claims related to the franchisee's operation of the Big O Tires store. This means that if a third party sues Big O Tires due to something the franchisee did, the franchisee is responsible for covering Big O Tires's costs.

Additionally, both the assignor (seller) and assignee (buyer) in a transfer situation are required to release Big O Tires from any claims, which could impact third parties who might otherwise have a claim against Big O Tires related to the store's operation or the asset transfer. These releases include known and unknown claims, with specific waivers for California franchisees under Section 1542 of the California Civil Code, which typically protects against releasing unknown claims. However, there are exceptions for claims under the Washington Franchise Investment Protection Act for assignors, assignees, and guarantors in Washington.

Furthermore, the agreement emphasizes that the franchisee is an independent contractor and is not authorized to make any contract, warranty, or representation or to create or imply any obligation on behalf of Big O Tires. This reinforces that third parties dealing with the franchisee cannot claim that Big O Tires is responsible for the franchisee's actions. Franchisees must also disclose that they are independent operators in all dealings with third parties, including customers, employees, and suppliers, to avoid any implication of a direct relationship with Big O Tires. These disclaimers and indemnification clauses are common in franchise agreements to protect the franchisor from liabilities arising from the franchisee's operations.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.