Does the release against Desi District cover unknown claims?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
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 Desi District Franchise Group, 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 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the general release covers both known and unknown claims. The release states that the franchisee releases Desi District 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.
This means that a franchisee, upon signing the release, gives up the right to sue Desi District for any reason, even for claims that the franchisee is not yet aware of. This is a significant concession and potential risk for the franchisee. The franchisee also agrees to a covenant not to sue, meaning they cannot initiate or participate in any legal proceedings against Desi District regarding any claim.
However, the document also includes riders for specific states like Maryland, New York, and Washington, which may limit the enforceability of certain provisions, including releases and waivers, under their respective franchise laws. For example, the Maryland Rider specifies that releases, estoppels, and waivers of liability are not intended to act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Law. Similarly, the Washington Addendum indicates that a release or waiver of rights executed by a franchisee shall not include rights under the Washington Franchise Investment Protection Act except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel.
Prospective franchisees should carefully review the General Release and any applicable state-specific riders with legal counsel to fully understand the scope of the release and its implications for their rights and potential claims against Desi District. They should also be aware that the franchisor may require a general release in circumstances such as a renewal of your franchise or as a condition of their approval of a sale of your franchise.