Does the Buff City Soap franchisor have liability to the developer if they assign the agreement?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement grants Franchisor the right, and Franchisee acknowledges and agrees that Franchisor maintains such right, to operate and change the System and Franchisor's business in any manner that is not expressly and specifically prohibited by this Agreement or Applicable Law. Whenever Franchisor has reserved in this Agreement a right and/or discretion to take or withhold an action, or to grant or decline to grant Franchisee a right to take or withhold an action, except as otherwise expressly and specifically provided in this Agreement or prohibited by Applicable Law, Franchisor may make its decision or exercise its right and/or discretion on the basis of its judgment of what is in its best interests, including its judgment of what is in the best interests of the Buff City Soap franchise network, at the time Franchisor's decision is made, without regard to: (1) whether other reasonable or even arguably preferable alternative decisions or actions could have been made by Franchisor; (2) whether Franchisor's decision or the action it takes promotes its financial or other individual interest; (3) whether Franchisor's decision or the action it takes applies differently to Franchisee and one or more other franchisees; or (4) whether Franchisor's decision or the exercise of its rights is adverse to Franchisee's individual interest or the individual interests of any other particular franchisees. Franchisor will have no liability to Franchisee for any such decision or exercise of its rights.
(b) No Liability for Acts of Other Party. Franchisee must not employ any of the Marks in signing any contract or applying for any license or permit, or in a manner (other than the use contemplated hereby) that may result in Franchisor's liability for any of Franchisee's indebtedness or obligations. Except as expressly authorized in writing, neither Franchisor nor Franchisee will make any express or implied agreements, warranties, guarantees or representations or incur any debt in the name or on behalf of the other Party or be obligated by or have any liability under any agreements or representations made by the other Party. Franchisor will not be obligated for any damages to any Person directly or indirectly arising out of the operation of the Makery.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to the 2025 Buff City Soap Franchise Disclosure Document, the franchisor will generally not have liability to the developer for decisions or actions they take, including those that may affect the developer's interests. Specifically, Buff City Soap retains the right to make decisions and changes to the system and business operations, provided these actions do not violate the developer's explicit rights or applicable laws. This broad discretion extends to decisions that may impact individual franchisees differently or adversely.
Buff City Soap explicitly states that it will not be liable to the developer for any decisions or exercises of its rights. This includes, but is not limited to, ensuring that Makeries are developed and operated in accordance with applicable law. The franchisee bears the responsibility for legal compliance in their Makery's development and operation.
Furthermore, the franchise agreement specifies that neither Buff City Soap nor the franchisee will incur debt or make agreements on behalf of the other party unless expressly authorized in writing. Buff City Soap will not be obligated for damages arising from the Makery's operation. This reinforces the separation of liability between the franchisor and franchisee, placing the onus on the franchisee for their business's debts, obligations, and operational liabilities.
In practical terms, a prospective Buff City Soap developer should understand that the franchisor retains significant control over the system and business model, and can make changes that affect the developer's business. However, Buff City Soap assumes no liability for the consequences of these decisions or for the developer's operational compliance. Therefore, franchisees need to be diligent in their own legal and business practices.