Does the Exit franchise agreement receipt waive claims related to a failure to diligently collect amounts due under the Franchise Agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
By executing this Agreement, Franchisee, individually and on behalf of Franchisee's heirs, legal representatives, successors, and assigns, and each assignee of this Agreement by accepting assignment of the same, hereby forever releases and discharges EXIT, Subfranchisor, and their respective officers, directors, employees, agents and servants, and their subsidiary and affiliated corporations, their respective officers, directors, employees, agents and servants, from any and all claims relating to or arising under any franchise agreement or any other agreement between the parties and executed prior to the date of this Agreement including but not limited to any and all claims, whether presently known or unknown, suspected or unsuspected.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the franchise agreement includes a general release of prior claims. By executing the agreement, the franchisee releases Exit and its related parties from any and all claims relating to or arising under any prior franchise agreement or other agreement between the parties. This release covers all claims, whether known or unknown, suspected or unsuspected. However, this section does not explicitly address whether this release extends to claims related to a failure to diligently collect amounts due under the Franchise Agreement.
While the agreement includes a release of prior claims, it also outlines the franchisee's ongoing obligations regarding payments. Franchisees must pay interest on overdue amounts, late fees, and fees for returned checks. Additionally, Exit and the subfranchisor have audit rights to inspect the franchisee's books and records to ensure compliance with the agreement. If underpayment exceeds 5% of the amount due, the franchisee is responsible for all audit costs. These provisions suggest that Exit retains the right to pursue amounts due under the agreement.
To fully understand the scope of the release and its implications for claims related to diligent collection of amounts due, a prospective franchisee should seek clarification from Exit. Specifically, they should inquire whether the general release in the franchise agreement covers claims related to the franchisor's diligence in collecting amounts owed, or if Exit retains the right to pursue such claims despite the release.