Does the Development Agreement for Monicals Pizza establish a fiduciary relationship between the parties?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
This Development Agreement does not establish a fiduciary relationship between the parties. Unless otherwise specifically provided in this Development Agreement with respect to certain issues, whenever this Development Agreement requires Developer to obtain Franchisor's written consent or permits Franchisor to take any action or refrain from taking any action, Franchisor is free to act in its own self-interest without any obligation to act reasonably, to consider the impact on Developer or to act subject to any other standard of care limiting Franchisor's right, except as may be provided by statute or regulation.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the Development Agreement does not establish a fiduciary relationship between the parties. The agreement is considered a purely contractual relationship, meaning that the developer is not an agent, legal representative, joint venturer, partner, employee, servant, or independent contractor of Monicals Pizza for any purpose. The developer cannot represent themselves as an agent of Monicals Pizza or create any obligations on behalf of the company.
This means that Monicals Pizza is not liable for any actions, omissions, contracts, or debts of the developer. The franchisor is also free to act in its own self-interest without any obligation to act reasonably or consider the impact on the developer, except as provided by statute or regulation.
This arrangement is typical in franchising, where the franchisor and franchisee are independent business entities. The absence of a fiduciary relationship means that each party is responsible for protecting its own interests and is not legally obligated to act in the best interest of the other. A prospective Monicals Pizza developer should be aware of this and seek independent legal and financial advice before entering into a Development Agreement.