Are the franchisee's owners bound by the release provided to Red Wagon Club?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
Consistent with the previous introduction, you, on your own behalf and on behalf of your successors, heirs, executors, administrators, personal representatives, agents, assigns, partners, owners, managers, directors, officers, principals, employees, and affiliated entities (collectively, the "Releasing Parties"), hereby forever release and discharge us and our current and former officers, directors, owners, managers, principals, employees, agents, representatives, current or former affiliated entities, successors, and assigns (collectively, the "Released Parties") of and from any and all claims, damages whether at law or in equity and known or unknown, demands, causes of action, suits, duties, liabilities, and agreements of any nature and kind (collectively, "Claims") that you and any of the other Releasing Parties now has, ever had, or, but for this document, hereafter would or could have against any of the Released Parties, including without limitation, any and all Claims in any way (1) arising out of or related to the Released Parties' obligations under the Franchise Agreement, or (2) otherwise arising out of or related to your and the other Releasing Parties' relationship, from the beginning of time to the date of your signature below, with any of the Released Parties. You, on your own behalf and on behalf of the other Releasing Parties, further covenant not to sue any of the Released Parties on any of the Claims released by this paragraph and represent that you have not assigned any of the Claims released by this paragraph to any individual or entity who is not bound by this paragraph.
IF THE FRANCHISE YOU OPERATE UNDER THE FRANCHISE AGREEMENT IS LOCATED IN CALIFORNIA OR ANY OF THE RELEASING PARTIES IS A RESIDENT OF CALIFORNIA, THE FOLLOWING SHALL APPLY:
SECTION 1542 ACKNOWLEDGMENT. IT IS YOUR INTENTION, ON YOUR OWN BEHALF AND ON BEHALF OF THE RELEASING PARTIES, IN EXECUTING THIS RELEASE THAT THIS INSTRUMENT BE AND IS A GENERAL RELEASE WHICH SHALL BE EFFECTIVE AS A BAR TO EACH AND EVERY CLAIM, DEMAND, OR CAUSE OF ACTION RELEASED BY YOU OR THE RELEASING PARTIES. YOU RECOGNIZE THAT YOU OR THE RELEASING PARTIES MAY HAVE SOME CLAIM, DEMAND, OR CAUSE OF ACTION AGAINST THE RELEASED PARTIES OF WHICH YOU, HE, SHE, OR IT IS TOTALLY UNAWARE AND UNSUSPECTING, WHICH YOU, HE, SHE, OR IT IS GIVING UP BY EXECUTING THIS RELEASE. IT IS YOUR INTENTION,
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, the owners of the franchise are indeed bound by the release provided to Red Wagon Club. As stated in Exhibit F, Sample General Release, Red Wagon Club requires a general release from both the franchisee and their owners as a condition of taking certain actions or agreeing to certain requests. This release and covenant not to sue is considered partial consideration for Red Wagon Club's willingness to act or agree to the franchisee's request.
The FDD outlines that by executing the release, the franchisee and the releasing parties, which include owners, are relinquishing any claims, demands, or causes of action against Red Wagon Club and its affiliates. This includes claims that are known or unknown at the time of executing the release. The document emphasizes the importance of consulting with legal counsel before signing the release to fully understand its implications, including the waiver of rights under Section 1542 of the California Civil Code, which pertains to unknown claims.
However, there is an exception for franchises located in Washington or if any releasing parties are residents of Washington. In such cases, the general release does not apply to any liability under the Washington Franchise Investment Protection Act RCW 19.100 and its associated rules. This means that while the release generally binds the franchisee and their owners, it does not protect Red Wagon Club from liabilities arising from violations of Washington's franchise laws in applicable situations. Therefore, prospective franchisees should carefully review the release with their legal counsel, paying special attention to the implications and any state-specific exceptions.