Is the Exit franchisee required to determine compliance with other applicable laws before executing the agreement?

According to Exit's 2025 Franchise Disclosure Document, the franchisee is responsible for ensuring that their execution and performance of the franchise agreement does not violate any existing agreements, covenants, orders, decrees, or judgments. Specifically, the franchisee represents and warrants that they, along with their officers, directors, and shareholders, are authorized to enter into the agreement and that doing so will not breach any existing obligations. This places the onus on the franchisee to conduct due diligence to confirm they are not contravening any legal or contractual duties by becoming an Exit franchisee.

This requirement is fairly standard in franchising, as franchisors need assurance that franchisees are not encumbered by conflicting obligations. For a prospective Exit franchisee, this means carefully reviewing any existing contracts, such as employment agreements or partnership deals, to ensure there are no non-compete clauses or other restrictions that would prevent them from operating an Exit franchise. They should also be aware of any court orders or administrative rulings that could impact their ability to fulfill the franchise agreement.

Failure to comply with this representation could have serious consequences. If Exit discovers that a franchisee has violated this warranty, it could potentially lead to a breach of contract and possible termination of the franchise agreement. Therefore, it is crucial for potential franchisees to seek legal counsel and conduct a thorough review of their existing obligations before signing the Exit franchise agreement to avoid future complications.