Does the Ledgers franchise agreement require guarantors of the franchisee to also release claims?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Release- Franchisee and all Franchises' guarantors, members, employees, agents, successors, assigns and affiliates fully and finally release and forever discharge Releasee, its past and present agents, employees, officers, directors, members, Area Representatives, Franchisees, successors, assigns and affiliates (collectively "Released Parties") from any and all claims, actions, causes of action, contractual rights, demands, damages, costs, loss of services, expenses and compensation which Area Representative could assert against Released Parties or any of them up through and including the date of this Release.
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- THIS IS A SPECIFIC RELEASE GIVING UP ALL RIGHTS WITH RESPECT TO THE TRANSACTIONS OR OCCURRENCES THAT ARE BEING RELEASED UNDER THIS AGREEMENT.
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- California Releasor- You represent and warrant that YOU EXPRESSLY WAIVE ANY AND ALL RIGHTS AND BENEFITS UNDER CALIFORNIA CIVIL CODE §1542, which provides as follows:
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.
- The above Release does not apply to any liabilities arising under the California Franchise Investment Law, the California Franchise Relations Act, Indiana Code § 23-2-2.5.1 through 23-2-2.7-7, the Maryland Franchise Registration and Disclosure Law, Michigan Franchise Investment Law, Minnesota Franchise Act, North Dakota franchise laws, the Rhode Island Investment Act, and the Washington Franchise Investment Protection Act.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the franchise agreement includes a release that extends to the franchisee's guarantors. Specifically, Exhibit C addresses the release, indicating that the franchisee and all of the franchisee's guarantors fully release the released parties from any and all claims. This means that if you are a Ledgers franchisee and have a guarantor for your obligations, that guarantor is also giving up certain rights to make claims against Ledgers.
This release covers a broad range of potential claims, including actions, causes of action, contractual rights, demands, damages, costs, loss of services, expenses, and compensation. The release extends to claims that the guarantor could assert against Ledgers and its related parties up to the date of the release. However, this release may not apply to certain liabilities arising under specific state franchise laws, such as the California Franchise Investment Law, the California Franchise Relations Act, and similar laws in other states like Indiana, Maryland, Michigan, Minnesota, North Dakota, Rhode Island, and Washington.
It is important for prospective Ledgers franchisees and their guarantors to carefully review this release with legal counsel to understand the full scope of the claims being waived and the potential implications. The FDD also notes that California residents expressly waive rights and benefits under California Civil Code §1542, regarding unknown claims, which further emphasizes the importance of understanding the release's implications. Franchisees should be aware of the specific exceptions and limitations to the release, particularly concerning state franchise laws, to ensure their rights are protected.