Does the general release for Brueggers Bagels extend to claims unknown at the time of execution?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Release by Franchisee and Guarantors. Franchisee (if Franchisee is an entity, on behalf of itself and its parent, subsidiaries and affiliates and their respective past and present officers, directors, shareholders, agents and employees, in their corporate and individual capacities and, if Franchisee is an individual, on behalf of himself/herself and his/her heirs, representatives, successors and assigns) (collectively, "Releasors") and Guarantors hereby release and forever discharge Franchisor, its predecessors, parents, subsidiaries, and affiliates and their respective officers, directors, shareholders, employees, successors, and assigns, past and present, from any claims, debts, liabilities, demands, obligations, actions, and causes of action, known or unknown, vested or contingent, which any of them may have ever had, now has, or may hereafter have by reason of any event, transaction, or circumstance arising out of or relating to the Franchise Agreement, the Development Agreement or the relationship of the parties thereto (collectively, "Claims") unless prohibited by applicable law, but excluding claims based on any representation made by Franchisor in the most recent Franchise Disclosure Document (including its exhibits and amendments) that Franchisor delivered to Franchisee or its representative in connection with the offer and sale of the Franchise Agreement or Development Agreement.
[For California franchisees, add: Each of the Releasors and Guarantors expressly waive and relinquish all rights and benefits which they may now have or in the future have under and by virtue of California Civil Code Section 1542. The Releasors and Guarantors do 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 if known by him must have materially affected his settlement with the debtor." For the purpose of implementing a general release and discharge as described herein, the Releasors and Guarantors expressly acknowledge that this agreement is intended to include in its effect, without limitation, all claims which the Releasors and Guarantors do not know or suspect to exist in their favor at the time of execution hereof, and that this agreement contemplates the extinguishment of any such claims.]
Source: Item 23 — RECEIPTS (FDD pages 61–335)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, the general release executed by the franchisee and guarantors extends to claims that are unknown at the time of execution. Specifically, for California franchisees, the release includes a waiver of rights under California Civil Code Section 1542, which states that a general release does not extend to claims the creditor doesn't know or suspect at the time of execution. The Brueggers Bagels agreement explicitly states that the release is intended to include all claims, even those not known or suspected at the time of signing. Franchisees also accept the risk that facts may change and agree that the release remains effective regardless of any differences in facts that may emerge later.
This means that a Brueggers Bagels franchisee is giving up their right to sue the franchisor for issues they are not even aware of when signing the agreement. This is a significant point for prospective franchisees to consider, as it could limit their ability to seek legal recourse for unforeseen problems that may arise during the franchise term. The franchisee is essentially assuming the risk of any unknown issues that could potentially lead to claims against Brueggers Bagels.
However, the FDD also notes some exceptions to this general release. For example, the release does not apply to claims arising under the Washington Franchise Investment Protection Act, RCW 19.100. Additionally, the New York General Business Law, Article 33, Sections 680 through 695, may supersede any provision of the Franchise Agreement or Development Agreement inconsistent with that law, and the release of claims does not release any claim franchisees may have under these sections of the New York General Business Law. Similarly, the Maryland Addendum to the Franchise Agreement specifies that the release will not apply to any liability under the Maryland Franchise Registration and Disclosure Law. These exceptions provide some protection for franchisees in those states, but the general release remains broad in scope for franchisees in other locations.