What is the effect of the 'Covenant Not to Sue' provision in the Bumper Man General Release?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
- **4.
Covenant Not to Sue.** Franchisee and Guarantors, on behalf of themselves and Releasors, covenant not to initiate, prosecute, encourage, assist, or (except as required by law) participate in any civil, criminal, or administrative proceeding or investigation in any court, agency, or other forum, either affirmatively or by way of cross-claim, defense, or counterclaim, against any person or entity released under Section 1 above with respect to any Claim released under Section 1 above.
- **5.
Complete Defense.** Franchisee and Guarantors: (i) acknowledge that this Release shall be a complete defense to any Claim released under Section 1 above; and (ii) consent to the entry of a temporary or permanent injunction to prevent or end the assertion of any such Claim.
- **6.
Successors and Assigns.** This Release will inure to the benefit of and bind the successor, assigns, heirs and personal representatives of Franchisor and each Releasor.
- 7. This Release of Claims does not apply to claims arising under the Franchise Investment Protection Act, chapter 19.100 RCW, or the rules adopted thereunder in accordance with RCW 19.100.220(2).
[The following is to be used only for California franchisees]
Acknowledgment of Releases under California Law. Each Party granting a release acknowledges a familiarity with Section 1542 of the Civil Code of the State of California, which provides as follows:
"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."
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2025 FDD)
According to the 2025 Bumper Man FDD, the 'Covenant Not to Sue' within the General Release has significant implications for franchisees and guarantors. This provision means that the franchisee and any guarantors agree not to initiate or participate in any legal proceedings against individuals or entities covered by the release. This includes civil, criminal, or administrative actions, whether pursued directly or indirectly through cross-claims, defenses, or counterclaims.
The General Release also provides Bumper Man with a complete defense against any claim covered by the release. Franchisees and guarantors consent to potential injunctions preventing them from pursuing such claims. This aspect of the release is designed to protect Bumper Man from legal challenges related to the released claims, ensuring that the company can operate without the threat of litigation from franchisees on matters covered in the release.
However, the release does not apply to claims arising under the Franchise Investment Protection Act, chapter 19.100 RCW, in Washington state, or the rules adopted under RCW 19.100.220(2). Furthermore, for franchisees in California, the release acknowledges Section 1542 of the California Civil Code, which states that a general release does not cover claims the releasing party is unaware of at the time of signing, which would have materially affected their settlement had they been known. This caveat provides some protection to franchisees who may later discover previously unknown claims.
The General Release benefits and binds the successors, assigns, heirs, and personal representatives of both Bumper Man and the releasing parties. This ensures that the terms of the release remain in effect even if the business or ownership changes hands, or in the event of death. Franchisees should carefully consider the implications of this provision, particularly when transferring or renewing their franchise agreement, as it can significantly limit their legal recourse against Bumper Man.