Does the release in the Itan franchise agreement cover claims related to disclosures made in connection with the franchise?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement
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- Release. Owner, you, and each of your officers, directors, shareholders, members, owners, employees, agents, representatives, affiliates, parents, divisions, successors and assigns, and all persons or firms claiming by, through, under, or on behalf of any or all of them (the "Franchisee Parties"), hereby release, acquit and forever discharge us, any and all of our past and present affiliates, parents, subsidiaries and related companies, divisions and partnerships, consultants, advisors and franchise sellers and its and their respective past and present officers, directors, shareholders, members, owners, employees, agents, representatives, affiliates, parents, divisions, successors and assigns, and the spouses of such individuals (collectively, the "Franchisor Parties"), from any and all claims, liabilities, damages, expenses, actions or causes of action which any of the Franchisee Parties may now have or has ever had, whether known or unknown, past or present, absolute or contingent, suspected or unsuspected, of any nature whatsoever, directly or indirectly arising out of or relating to the execution and performance (or lack thereof) of the Franchise Agreement or the offer, sale or acceptance of the franchise related thereto (including, but not limited to any disclosures and representations made in connection therewith). The foregoing release shall not be construed to apply with respect to any obligations contained within this Agreement.
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- California Law. You and Owner hereby express your intention to release all existing claims, whether known or unknown, against the Franchisor Parties. Accordingly, you and Owner hereby waive §1542 of the California Civil Code, which provides the following:
- "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."
[Section 2 only applies for California franchisees; otherwise it is omitted]
- Washington Franchise Law. The General Release does not apply with respect to claims arising under the Washington Franchise Investment Protection Act, RCW 19.100, or the rules adopted thereunder.
[Section 3 only applies for Washington franchisees; otherwise it is omitted]
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the franchise agreement includes a release that covers claims related to the disclosures made in connection with the franchise. The agreement states that the franchisee releases Itan from any and all claims, liabilities, damages, expenses, actions, or causes of action arising out of or relating to the execution and performance of the Franchise Agreement or the offer, sale, or acceptance of the franchise. This includes any disclosures and representations made in connection with the franchise.
However, there are some limitations to this release. For franchisees in California, they are waiving California Civil Code §1542, regarding unknown claims. This means they are agreeing to release claims they may not even be aware of at the time of signing the agreement. For franchisees in Washington, the general release does not apply to claims arising under the Washington Franchise Investment Protection Act.
Furthermore, the FDD states that for franchisees in Maryland, any representations requiring prospective franchisees to assent to the release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law. Also, nothing in the Franchise Agreement is intended to disclaim any of the representations Itan made in the Franchise Disclosure Document. Similarly, in Michigan, a requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in the Michigan franchise act is void and cannot be enforced against the franchisee.