Does the Counselor Realty franchise agreement create a fiduciary relationship between the franchisee and Counselor Realty?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.5 Relationships. You are an independent contractor, not the employee, agent, partner or joint venturer of Counselor. This Agreement does not create a fiduciary relationship or a relationship of special trust and confidence. No person may acquire any interest in or under this Agreement except in accordance with Article 9. No other person except our affiliate is intended to be a beneficiary of this Agreement. If Franchisee is more than one person, all are jointly and severally liable hereunder. If Franchisee is a partnership, corporation or other entity, all of its partners, shareholders or owners from time to time shall execute the guaranty at the foot of this Agreement. We owe no implied duties to you.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to the 2025 Counselor Realty Franchise Disclosure Document, the franchise agreement explicitly states that it does not create a fiduciary relationship between the franchisee and Counselor Realty. The agreement establishes the franchisee as an independent contractor, not an employee, agent, partner, or joint venturer of Counselor Realty. This means that Counselor Realty does not owe the franchisee the heightened duties of care and loyalty that are characteristic of a fiduciary relationship.
This provision is important for prospective franchisees to understand because it clarifies the legal nature of their relationship with Counselor Realty. As an independent contractor, the franchisee is responsible for their own business decisions and operations, and Counselor Realty is not obligated to act in the franchisee's best interest in the same way a fiduciary would be. This independence also means the franchisee has more control over their business but also bears more risk.
Many franchise agreements include similar clauses to define the relationship between the franchisor and franchisee and to avoid the creation of a fiduciary duty. Franchisees should carefully review these provisions with legal counsel to fully understand their rights and responsibilities. This ensures that the franchisee understands they are entering into a business relationship where they operate independently and are responsible for their own success, without the legal protections afforded by a fiduciary relationship.