What liability does the Cilantro Taco Grill franchisee retain after the effective date of the transfer?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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;
- 19.5.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for thirty-six (36) months thereafter, Franchisee and Principals, if any, shall not, either directly or indirectly, for themselves or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of the Franchised Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; or (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any restaurant or food service business featuring Mexican cuisine within twenty (20) miles of the Territory or any Cilantro Taco Grill location; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Cilantro Taco Grill franchisees.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, after a transfer of the franchise, the franchisee and the transferee must execute a general release, in a form satisfactory to Cilantro Taco Grill, which releases Cilantro Taco Grill from any and all claims. This release extends to Cilantro Taco Grill's officers, directors, shareholders, members, and employees in their corporate and individual capacities. The release includes claims arising under federal, state, and local laws, rules, and ordinances.
Additionally, the franchisee will agree to subordinate any claims they may have against the transferee to Cilantro Taco Grill. The franchisee must also indemnify Cilantro Taco Grill against any claims by the transferee relating to misrepresentations in the transfer process. This excludes any representations made by Cilantro Taco Grill in the Franchise Disclosure Document given to the transferee.
Furthermore, for a period of thirty-six months after the transfer, the franchisee and their principals are restricted from engaging in any competitive activities. Specifically, they cannot divert business from Cilantro Taco Grill outlets, participate in any Mexican cuisine restaurant within 20 miles of the Territory or any Cilantro Taco Grill location, or perform any act that could harm the goodwill associated with the Cilantro Taco Grill brand. These non-compete obligations are designed to protect Cilantro Taco Grill's interests and the stability of its franchise system.