Does the Cilantro Taco Grill franchise agreement require a general release as outlined in Attachment 3?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
ay have terms and conditions different from this Agreement, except that the transferee shall not be required to pay the Initial Franchise Fee;
- 16.3.6 Franchisee and the transferee and each of Franchisee's and the transferee's Principals shall have executed a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor and Franchisor's officers, directors, shareholders, members and
Cilantro Taco Grill FA 2024
employees in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules and ordinances. Franchisee will agree to subordinate any claims Franchisee may have against the transferee to Franchisor, and indemnify Franchisor against any claims by the transferee relating to misrepresentations in the transfer process, specifically excluding those representations made by Franchisor in the Franchise Disclosure Document given to the transferee;
- 16.3.7 Franchisor has granted written approval of the material terms and conditions of the Transfer, including, without limitation, that the price and terms of payment will not adversely affect the Franchised Business's operation. However, Franchisor's approval of a Transfer is not in any way a representation or warranty of the transferee's success or the soundness of transferee'
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, the franchise agreement includes a general release under certain conditions. Specifically, if a franchisee transfers their franchise to a new owner, both the franchisee and the new owner must execute a general release of claims against Cilantro Taco Grill. This release must be in a form satisfactory to Cilantro Taco Grill and covers any claims against the franchisor and its personnel, including those arising from federal, state, and local laws.
However, the FDD also states that Minnesota Rules prohibit Cilantro Taco Grill from requiring a franchisee to agree to a general release, except as part of a voluntary settlement of disputes. To the extent that any provisions in the Franchise Agreement are inconsistent with this rule, they are deleted.
Therefore, while a general release is mentioned in the context of franchise transfers, its enforceability may be limited by state laws, particularly in Minnesota. Prospective franchisees should clarify with Cilantro Taco Grill the specific circumstances under which a general release is required and its implications in their specific state.