Does the Face Foundrie Franchisor have any liability to the Area Developer for decisions made?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
In the absence of an applicable statute, Franchisor will have no liability to Area Developer for any such decision or action.
Franchisor and Area Developer intend that the exercise of Franchisor rights or discretion will not be subject to limitation or review.
If applicable law implies a covenant of good faith and fair dealing in this Agreement, Franchisor and Area Developer agree that such covenant shall not imply any rights or obligations that are inconsistent with a fair construction of the terms of this Agreement and that this Agreement grants Franchisor the right to make decisions, take actions and/or refrain from taking actions not inconsistent with Area Developer's rights and obligations hereunder.
Source: Item 23 — RECEIPTS (FDD pages 74–257)
What This Means (2025 FDD)
According to the 2025 Face Foundrie FDD, the franchisor generally has no liability to the Area Developer for decisions or actions taken, provided there isn't an applicable statute that says otherwise. This means Face Foundrie has significant discretion in how it operates and makes decisions, even if those decisions might affect the Area Developer's interests. The Area Developer acknowledges this and agrees that the franchisor's decisions are not subject to limitation or review.
This clause emphasizes Face Foundrie's autonomy in managing its franchise system. The franchisor can make decisions based on its best interests and the interests of the franchise network as a whole, without necessarily prioritizing the Area Developer's individual interests. This includes decisions that might impact the Area Developer negatively or differently compared to other franchisees or company-owned operations.
However, if applicable law implies a covenant of good faith and fair dealing, Face Foundrie and the Area Developer agree that such covenant shall not imply any rights or obligations that are inconsistent with a fair construction of the terms of the agreement. This agreement grants Face Foundrie the right to make decisions, take actions and/or refrain from taking actions not inconsistent with Area Developer's rights and obligations hereunder. This suggests that while Face Foundrie has broad discretion, it must still act in a manner that is consistent with the Area Developer's rights and obligations as defined in the Area Development Agreement.
For a prospective Area Developer, this means understanding that Face Foundrie retains considerable control over the franchise system and its evolution. While the Area Developer has specific rights and obligations, Face Foundrie's decisions are largely protected from legal challenges unless they violate an applicable statute. It is important for potential Area Developers to carefully consider this aspect and seek legal counsel to fully understand the implications of this clause.