Does City Publications' consent to a transfer waive any claims against the transferee?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Code §§31000-31516 and the California Franchise Relations Act, Cal. Bus. And Prof. Code §§20000-20043, the Franchise Agreement for CITY PUBLICATIONS FRANCHISE GROUP, INC. shall be amended as follows:
- The California Franchise Relations Act provides rights to the Franchise concerning termination or nonrenewal of the Franchise Agreement, which may supersede provisions in the Franchise Agreement, specifically Sections 5.B and 19.
- Sections 5B.10 and 20B.2 of the Franchise Agreement require Franchisee to sign a general release as a condition of renewal and transfer of the franchise; such release shall exclude claims arising under California Franchise Investment Law and California Franchise Relations Act.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
Based on the 2025 City Publications Franchise Disclosure Document, the franchise agreement requires franchisees in certain states to sign a general release as a condition of transfer. However, this release does not waive all claims against the transferee. Specifically, the FDD includes addenda for California, Maryland, and Rhode Island that explicitly exclude claims arising under their respective franchise laws from this general release.
For instance, in California, Sections 5B.10 and 20B.2 of the Franchise Agreement require a franchisee to sign a general release as a condition of transfer, but this release excludes claims arising under the California Franchise Investment Law and the California Franchise Relations Act. A similar provision exists for franchisees in Maryland and Rhode Island, protecting their rights under their state's franchise laws.
This means that while City Publications requires a general release upon transfer, franchisees in California, Maryland, and Rhode Island retain the right to pursue claims against the transferee specifically related to violations of their state's franchise laws. Prospective franchisees should consult with legal counsel to fully understand the implications of these provisions and how they apply to their specific circumstances, especially concerning potential claims they might have under state franchise laws despite signing a general release.