Must the Crab N Spice franchisee and transferee execute a general release of CNS Franchising?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
[This is our current standard form of General Release. This document is not signed when you purchase a franchise. In circumstances such as a renewal of your franchise or as a condition of our approval of a sale of your franchise, we may require you to sign a general release.]
This General Release ("Release") is executed by the undersigned ("Releasor") in favor of Crab N Spice Group, a California corporation ("CNS Franchising").
Background Statement: [describe circumstances of Release]
Releasor agrees as follows:
- **1.
Release.** Releasor (on behalf of itself and its parents, subsidiaries and affiliates and their respective past and present officers, directors, shareholders, managers, members, partners, agents, and employees (collectively, the "Releasing Parties")) hereby releases CNS Franchising, its affiliates, and their respective directors, officers, shareholders, employees, and agents (collectively, the "Released Parties") from any and all claims, causes of action, suits, debts, agreements, promises, demands, liabilities, contractual rights and/or obligations, of whatever nature, known or unknown, which any Releasing Party now has or ever had against any Released Party based upon and/or arising out of events that occurred through the date hereof, including without limitation, anything arising out of the Franchise Agreement (collectively, "Claims").
Source: Item 22 — CONTRACTS (FDD pages 50–51)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, a general release is not required when purchasing a franchise. However, Crab N Spice may require a franchisee to sign a general release in circumstances such as a renewal of the franchise agreement or as a condition of approving the sale of the franchise.
The general release, when required, is executed by the franchisee (referred to as the "Releasor") in favor of Crab N Spice Group, a California corporation ("CNS Franchising"). This release covers the Releasor, including its parents, subsidiaries, affiliates, and their respective officers, directors, shareholders, managers, members, partners, agents, and employees, who release CNS Franchising, its affiliates, and their respective directors, officers, shareholders, employees, and agents from any and all claims, causes of action, suits, debts, agreements, promises, demands, liabilities, contractual rights, or obligations.
Notably, a Maryland Rider to the Franchise Agreement specifies that as a condition of the sale of a franchise, CNS Franchising cannot require a prospective franchisee to agree to a release, assignment, novation, waiver, or estoppel that would relieve CNS or any other person from liability under the Maryland Franchise Law. Furthermore, any general release required as a condition of renewal, sale, or assignment/transfer does not apply to any liability under the Maryland Franchise Law. This indicates that while general releases may be used in some situations, they are subject to certain legal limitations, particularly concerning franchisees in Maryland.