What happens if a general release is prohibited for a City Publications franchisee during a transfer?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee desires to sell or transfer any rights or assets described in the preceding sentence to any transferee, Franchisee shall first obtain the written consent of Franchisor to such transaction, which consent will be conditioned upon the satisfaction of the following conditions:
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- Franchisee shall have executed a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its officers, directors, shareholders and employees, in their corporate and individual capacities including, without limitation, claims arising under federal, state or local laws, rules or ordinances, and any other matters incident to the termination of this Agreement or to the transfer of Franchisee's interest herein or to the transfer of Franchisee's ownership of all or any part of the Franchised Business which operates this Franchise. If a general release is prohibited, Franchisee shall give the maximum release allowed by law.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, if a general release is prohibited during a franchise transfer, the franchisee must provide the maximum release allowed by law. This condition is part of the requirements that a franchisee must meet to obtain the franchisor's written consent for the transfer of any rights or assets related to the franchise.
In certain states like California and Rhode Island, the FDD includes specific amendments addressing the enforceability of general releases. For example, in California, the release must exclude claims arising under the California Franchise Investment Law and the California Franchise Relations Act. Similarly, in Rhode Island, any general release required as a condition of transfer will be void with respect to claims under The Rhode Island Franchise Investment Act.
This means that while City Publications aims to obtain a release of claims from the franchisee during a transfer, the scope of that release may be limited by state laws designed to protect franchisees. A prospective franchisee should consult with legal counsel to understand the specific implications of these release requirements in their state and the extent to which they can be enforced.