Does the Operating Agreement for a Dq Treat franchise require franchisees to execute a general release of claims upon renewal or transfer?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
- E.
The Operating Agreement requires franchisee to execute a general release of claims upon renewal or transfer of the Operating Agreement.
California Corporations Code Section 31512 provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of that law or any rule or order there under is void.
Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Section 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 – 20043).
- F.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor.
Source: Item 23 — UItem 23U***:** U**Receipts (FDD pages 67–70)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, the Operating Agreement does require franchisees to execute a general release of claims upon renewal or transfer of the Operating Agreement. However, this requirement may be subject to certain legal limitations, particularly in California. The FDD specifically mentions California Corporations Code Section 31512, which states that any condition that binds a person acquiring a franchise to waive compliance with any provision of the law is void. This includes waiving rights under the Franchise Investment Law and the Franchise Relations Act.
For a prospective Dq Treat franchisee, this means that while the Operating Agreement may include a clause requiring a general release of claims upon renewal or transfer, the enforceability of this clause could be limited, especially in California. This provision aims to protect franchisees from unknowingly waiving their legal rights.
The FDD also notes that no statement, questionnaire, or acknowledgment signed by a franchisee in connection with the franchise relationship can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by the franchisor. This further protects franchisees' rights and ensures they cannot inadvertently waive legal protections. Franchisees should consult with legal counsel to fully understand their rights and obligations regarding the release of claims, particularly in the context of state-specific franchise laws.