What releases are required from the Cilantro Taco Grill franchisee and transferee during a transfer?
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.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, as part of a Cilantro Taco Grill franchise transfer, both the franchisee and the transferee, along with their respective principals, must execute a general release. This release, in a form satisfactory to Cilantro Taco Grill, covers any and all claims against the franchisor, its officers, directors, shareholders, members, and employees in their corporate and individual capacities. The claims include, but are not limited to, those arising under federal, state, and local laws, rules, and ordinances.
Additionally, the franchisee must agree to subordinate any claims they may have against the transferee to Cilantro Taco Grill. They must also indemnify Cilantro Taco Grill against any claims by the transferee relating to misrepresentations during the transfer process. This indemnification specifically excludes representations made by Cilantro Taco Grill in the Franchise Disclosure Document given to the transferee.
However, the FDD also states that in accordance with Minnesota Rules, Cilantro Taco Grill cannot require a franchisee to assent 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. Prospective franchisees should clarify with Cilantro Taco Grill how these potentially conflicting requirements are applied in practice, especially if they are located in or considering a franchise in Minnesota.