What condition applies to the third-party transferee of a Pearce Bespoke franchise?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, [Franchisee has notified Franchisor of its desire to transfer the Agreement and all rights related thereto, or an ownership interest in Franchisee, to a transferee/enter into a successor franchise agreement/amend the Agreement] OR [the Agreement is being terminated/or indicate other reason for the requirement of this waiver and release], and Franchisor has consented to such; and
WHEREAS, as a condition to Franchisor's consent, Releasor has agreed to execute this Release upon the terms and conditions stated below.
This General Release of Claims will not apply to claims arising under the Franchise Investment Protection Act, Chapter 19.100 RCW, or the rules adopted thereunder.
Source: Item 23 — RECEIPTS (FDD pages 39–172)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke FDD, a condition of the Franchisor's consent to a transfer of the Franchise Agreement is that the Releasor, which includes the franchisee and each individual holding an ownership interest in the franchisee, agrees to execute a General Release of Claims. This release is in favor of Pearce Bespoke Franchising, LLC. The General Release of Claims will not apply to claims arising under the Franchise Investment Protection Act, Chapter 19.100 RCW, or the rules adopted thereunder.
This means that if a franchisee wants to sell their Pearce Bespoke franchise to a third party, as a condition of Pearce Bespoke's approval of the sale, the franchisee (the Releasor) must sign a release that absolves Pearce Bespoke from any claims. This requirement ensures that Pearce Bespoke is protected from potential legal issues arising from the previous franchisee's operation of the business. However, this release does not cover claims arising under Washington State's Franchise Investment Protection Act.
This condition is a fairly standard practice in franchising. Franchisors often require a release to avoid future liabilities related to the transferred franchise. Prospective franchisees should carefully review the General Release of Claims and understand its implications before agreeing to the transfer. It is advisable to seek legal counsel to fully understand the rights being waived and the potential risks involved.