Franchisees often find that they have been wronged by their franchisor, but are unable to pursue relief because they signed a general release of all claims against the franchisor. Whenever you, as a franchisee, get a general release from your franchisor, you should check with a franchise lawyer to see if you should sign it. This blog will answer a few basic questions about general releases.
What is a general release? A general release is a contract where one side releases the other side of all claims that it may have. Usually, a general release is effective to release all claims that that party has, whether they are known or unknown, and that exist as of the time the franchisee executes the release. Typically, if the franchisor engages in wrongdoing after the release is signed, claims arising from that conduct are not covered.
Why are releases important? A general release is important because it gives away, or gives up, any claims that the franchisee may have against the franchisor. You would not write a check to the franchisor for nothing—therefore, you should not execute a general release for nothing. Courts will usually enforce general releases unless there are extenuating circumstances.
When do franchisors ask for general releases? Franchisors typically ask franchisees for general releases when there are changes in the franchise agreement, when the franchise is renewed, when it is transferred, and on any other number of occasions. Especially if there is unrest in a franchise system, the franchisor may demand general releases from franchisees quite often.
How do I know that I am signing a general release? Releases are frequently titled “Release” or “General Release.” That word may be combined with other words, such as “Consent to Assignment and Release.” At the same time, however, releases may be “buried” in the middle of other documents; some franchisors even include a paragraph that consists of a general release right in the middle of their franchise agreements. You should make sure that a knowledgeable franchise lawyer reviews your documentation before you sign it and that you get complete advice.
What if I didn’t know I was signing a release? If you did not know you were signing a release, or you feel that you were forced to sign it, then you should see a franchise lawyer to determine if you have grounds for striking the release or making it ineffective. While a release is generally treated like other contracts by courts, and frequently will be upheld, only a knowledgeable franchise attorney can make a clear assessment as to your particular circumstances.