Are the principals of the franchisee considered 'Releasing Parties' when granting a release 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 Red Wagon Club's 2024 Franchise Disclosure Document, the principals of the franchisee are included in the definition of 'Releasing Parties' when granting a release to Red Wagon Club. As stated in Exhibit F, the sample general release, the definition of 'Releasing Parties' includes the franchisee, their successors, heirs, executors, administrators, personal representatives, agents, assigns, partners, owners, managers, directors, officers, principals, employees, and affiliated entities.
This means that when a franchisee grants a release to Red Wagon Club, it extends not only from the franchisee themselves but also from all those listed within the definition of 'Releasing Parties'. This has significant implications, as it prevents any of these parties from pursuing claims against Red Wagon Club related to the Franchise Agreement or the relationship between the parties. The franchisee is also required to ensure that none of the Releasing Parties sue Red Wagon Club and that none of the claims released have been assigned to any individual or entity not bound by the release.
The document also includes a Section 1542 Acknowledgment, particularly relevant if the franchise is in California or any of the Releasing Parties are residents of California. This section emphasizes that the release is intended to be a general release, barring every claim, demand, or cause of action, even those unknown or unsuspected at the time of signing. Franchisees are advised to consult with legal counsel to fully understand the implications of this release, including the waiver of rights under California Civil Code Section 1542.
However, if the franchise is located in Washington or any of the Releasing Parties are residents of Washington, any general release provided does not apply to any liability under the Washington Franchise Investment Protection Act RCW 19.100, and the rules adopted thereunder. This provides an exception to the general release, protecting the franchisee's rights under Washington franchise law.