What is the purpose of the General Release within the Ancillary Agreements for Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
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Consistent with the previous introduction, you, on behalf of yourself and your successors, heirs, executors, administrators, personal representatives, agents, assigns, partners, owners, directors, officers, principals, employees, and affiliated entities (collectively, the "Releasing Parties"), hereby forever release and discharge us and our parent and other affiliated entities, and our and their respective current and former officers, directors, owners, principals, employees, agents, representatives, successors, and assigns current and former officers, directors, owners, principals, employees, agents, representatives, successors, and assigns (collectively, the "Potbelly Parties") from any and all claims, damages, demands, debts, causes of action, suits, duties, liabilities, costs, and expenses of any nature and kind, whether presently known or unknown, vested or contingent, suspected or unsuspected (all such matters, collectively, "Claims"), that you and any other Releasing Party now have, ever had, or, but for this Consent, hereafter would or could have against any Potbelly Party (1) arising out of or related in any way to the Potbelly Parties' performance of or failure to perform their obligations under the Franchise Agreement before the date of your signature below, (2) arising out of or related in any way to our offer and grant to you of your Potbelly Shop franchise, or (3) otherwise arising out of or related in any way to your and the other Releasing Parties' relationship, from the beginning of time to the date of your signature below, with any of the Potbelly Parties. You, on behalf of yourself and the other Releasing Parties, further covenant not to sue any Potbelly Party on any Claim released by this paragraph and represent that you have not assigned any Claim released by this paragraph to any individual or entity that is not bound by this paragraph.
We also are entitled to a release and covenant not to sue from your owners. By his, her, or their separate signatures below, your owners likewise grant to us the release and covenant not to sue provided above.
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The following language applies only to transactions with California franchisees
The parties granting the release above acknowledge a familiarity with Section 1542 of the Civil Code of the State of California, which provides as follows:
"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release which, if known by him, must have materially affected the settlement with the debtor."
Each party granting the release above recognizes that he, she, or it may have some claim, demand, or cause of action against the released parties of which he, she, or it is unaware and unsuspecting, and which he, she, or it is giving up by signing this release.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the General Release within the Ancillary Agreements serves to release Potbelly Parties from any and all claims, damages, and causes of action that the franchisee (and related parties) may have against them. This release covers a broad range of potential issues, including those related to the performance (or non-performance) of obligations under the Franchise Agreement, the offer and grant of the franchise itself, and the overall relationship between the franchisee and Potbelly Sandwich Works. The release extends to both known and unknown claims, effectively preventing franchisees from suing Potbelly Sandwich Works over past events.
Specifically, the franchisee agrees to release and discharge Potbelly Sandwich Works, including its parent and affiliated entities, as well as their respective officers, directors, owners, employees, agents, and successors, from any claims or liabilities. This includes any issues arising from the franchise agreement, the grant of the franchise, or the relationship between the parties up to the date of signing the release. The franchisee also agrees not to sue Potbelly Sandwich Works on any claim covered by the release.
For franchisees in California, the document acknowledges Section 1542 of the California Civil Code, which states that a general release does not cover claims the creditor doesn't know about, but the franchisee knowingly waives this protection. This means California franchisees are explicitly giving up their right to claim damages for issues they are unaware of at the time of signing the release. This waiver is intended to be comprehensive, ensuring that all potential claims, known or unknown, are released to the fullest extent permitted by law.
Potbelly Sandwich Works also requires a release and covenant not to sue from the franchisee's owners, ensuring that all relevant parties are bound by the terms of the General Release. This is a common practice in franchising to protect the franchisor from future litigation and ensure a clean break in case of disputes or termination of the franchise agreement.