Does the release in the Itan franchise agreement cover claims related to representations made in connection with the franchise?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 representations made in connection with the franchise. The release states that the franchisee parties release the franchisor parties from any and all claims and liabilities, arising out of or relating to the execution and performance of the franchise agreement or the offer, sale, or acceptance of the franchise, including any disclosures and representations made in connection therewith. This means that franchisees are giving up their right to sue Itan over statements made during the franchise sales process, except for obligations contained within the agreement itself.
However, there are some exceptions to this general release. For franchisees in Washington, the general release does not apply to claims arising under the Washington Franchise Investment Protection Act. For franchisees in Maryland, the release does not apply to any liability under the Maryland Franchise Law, and nothing in the franchise agreement is intended to disclaim the representations made in the Franchise Disclosure Document. Additionally, Michigan law states that any requirement that a franchisee assent to a release that deprives them of rights and protections provided in the Michigan Franchise Investment Law is void and unenforceable.
It's also important to note that any representations not specifically contained in the franchise agreement made before entering into the agreement do not survive after the signing of the agreement. However, the agreement also states that nothing in the agreement is intended to disclaim any of the representations Itan made in the Franchise Disclosure Document. This could create some ambiguity regarding what representations a franchisee can rely on after signing the agreement. Prospective franchisees should carefully review these provisions with a legal professional to understand their rights and obligations.