What is the effect of the covenant not to sue that a Camp Margaritaville franchisee grants to the 'Margaritaville Parties'?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
Consistent with the previous introduction, you, on your own behalf and on behalf of your successors, heirs, executors, administrators, personal representatives, agents, assigns, partners, shareholders, members, directors, officers, principals, employees, and affiliated entities (collectively, the "Releasing Parties"), hereby forever release and discharge us, our parents, and our affiliates, and our and their current and former officers, directors, shareholders, principals, agents, representatives, employees, successors, and assigns (collectively, the "Margaritaville Parties"), from any and all claims, damages, demands, debts, causes of action, suits, duties, liabilities, costs, and expenses of any nature and kind, whether presently known or unknown, vested or contingent, suspected or unsuspected (all such matters, collectively, "Claims") that you and any other Releasing Party now have, ever had, or, but for this document, hereafter would or could have against any Margaritaville Party (1) arising out of or related in any way to the Releasing Parties' rights or the Margaritaville Parties' obligations under the Franchise Agreement before the dates of the signatures below or (2) otherwise arising out of or related in any way to your and the other Releasing Parties' relationship, from the beginning of time to the dates of the signatures below, with any Margaritaville Party. You, on your own behalf and on behalf of the other Releasing Parties, further covenant not to sue any of the Margaritaville Parties on any of the Claims released by this paragraph and represent that you have not assigned any of the Claims released by this paragraph to any individual or entity who is not bound by this paragraph.
We also are entitled to a release and covenant not to sue from your owners. By his, her, or their separate signatures below, your owners likewise grant to us the release and covenant not to sue provided above.
[The following additional language should be used with California franchisees]
Each of the parties granting the release above 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 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 the settlement with the debtor."
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, a franchisee, along with their successors, heirs, executors, administrators, personal representatives, agents, assigns, partners, shareholders, members, directors, officers, principals, employees, and affiliated entities (collectively, the "Releasing Parties"), releases and discharges Camp Margaritaville, its parents, affiliates, and their current and former officers, directors, shareholders, principals, agents, representatives, employees, successors, and assigns (collectively, the "Margaritaville Parties") from all claims and liabilities. This release covers any damages, demands, debts, causes of action, suits, duties, costs, and expenses, whether known or unknown, vested or contingent, suspected or unsuspected, that the franchisee has or may have against the Margaritaville Parties. This release extends from the beginning of time to the dates of the signatures on the agreement.
The covenant not to sue means that the franchisee and other Releasing Parties agree not to initiate any legal action against the Margaritaville Parties regarding any of the released claims. The franchisee also represents that they have not assigned any of these claims to any individual or entity not bound by this agreement. This release and covenant not to sue also extends to the franchisee's owners, who must separately sign to grant the same release and covenant.
For California franchisees, the agreement acknowledges California Civil Code Section 1542, which states that a general release does not cover claims unknown at the time of signing that, if known, would have materially affected the settlement. This means that even with the general release, California franchisees retain some rights regarding claims they were unaware of when signing the agreement. This is a standard legal protection in California to prevent unfair releases of unknown claims. Prospective franchisees should carefully consider the implications of this release and covenant not to sue, especially concerning potential future disputes or liabilities related to their Camp Margaritaville franchise.