What is the purpose of including a General Release as Exhibit 1 in the Chatime franchise agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
1542 General Release; Extent. 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.
If any restriction set forth in this General Release is found by any court of competent jurisdiction to be unenforceable because it extends in too broad a scope, it will be interpreted to extend only over the maximum scope of release as to which it may be enforceable. This General Release does not apply to any release or waiver which would relieve any person from liability imposed to the FRANCHISOR by applicable laws.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, a general release included as Exhibit 1 does not extend to claims that the releaser is unaware of at the time of signing, if knowing about them would have significantly altered the settlement. This means Chatime franchisees are not waiving rights to claims they don't know about when signing the release. If any part of the release is deemed too broad by a court, it will be interpreted to have the maximum enforceable scope. The general release does not absolve Chatime from liabilities imposed by applicable laws.
For franchisees in Maryland and New York, there are specific stipulations regarding the General Release. In Maryland, a general release required as a condition of approval will not apply to any liability under the Maryland Franchise Registration and Disclosure Law. Similarly, in New York, all rights and causes of action arising from the provisions of Article 33 of the General Business Law of the State of New York will remain in force, ensuring the non-waiver provisions of General Business Law §§687.4 and 687.5 are satisfied.
These stipulations protect franchisees from unknowingly waiving their rights under specific state laws. Prospective franchisees should carefully review the General Release and any state-specific addenda with legal counsel to fully understand their rights and obligations.