Is Crown Gold Exchange allowed to require a Minnesota franchisee to assent to a general release?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
- (viii) Franchisee, its Owners, and the transferee and its owners execute a general release of Crown Gold Franchising in a form satisfactory to Crown Gold Franchising; and
Attachment 5 to Franchise Agreement
FORM OF GENERAL RELEASE
[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 Goldmember, LLC, a Idaho limited liability company ("Crown Gold Franchising").
Background Statement: [describe circumstances of Release]
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, Crown Gold Exchange can require a general release from franchisees under certain circumstances. Specifically, when a franchisee seeks to transfer their franchise to another party, Crown Gold Exchange can require the current franchisee, its owners, and the prospective new owner to execute a general release of Crown Gold Franchising. The FDD specifies that this release must be in a form satisfactory to Crown Gold Franchising.
This requirement means that a franchisee looking to sell their business must agree to release Crown Gold Exchange from any potential claims or liabilities as a condition of the transfer. This could include past disputes or issues that the franchisee might otherwise have pursued legally. The prospective buyer must also agree to this release, which could limit their future legal options against Crown Gold Exchange as well.
The FDD also includes a form of general release as Attachment 5. The document states that this form is not signed when purchasing the franchise, but may be required in circumstances such as a renewal or the approval of a sale of the franchise. The background statement of the release allows for a description of the circumstances of the release.
While the FDD specifies that Idaho law governs the guaranty agreement, it does not specify which state law governs the franchise agreement. The FDD does not explicitly state whether Crown Gold Exchange is allowed to require a Minnesota franchisee to assent to a general release; therefore, a prospective franchisee should consult with legal counsel to understand the implications of such a release and whether it is enforceable under Minnesota law.