Franchisors are always protecting their butts to the fullest extent possible, and that is often what franchisors hire me to do as their attorney. But, franchisees should be aware the rights they are giving up when signing a release, such as the one below from the 2007 UFOC of Snap Fitness.
The release requires the franchisee to give up any right to sue for any reason. Many U.S. states reserve certain legal action by franchisees to protect their financial investments from fraud, making the release unenforceable under certain circumstances. But signing a release does in many situations prevent a franchisee from using the courts to enforce a right or to protect themselves. And if you can’t sue, the franchisee will have little leverage over the issue when dealing with the franchisor.
Below is the release from Snap Fitness.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
The Pundit is correct. When you sign a FA you are giving up some rights. Make darn sure that what you are getting in return is worth their surrender.
This topic came up in another forum recently. Below is a snippet of what I posted there:
Here are a few valid reasons I have found to consider limiting your options via a franchise agreement.
1) You cannot secure an “A” location without a franchise, and an “A” location is desirable AND lucrative.
2) The franchise has either a demonstrable USP or a very obvious qualitative one.
3) You need the training and the operational guidance of the concept, and consultants or trainers are not readily available in the market place.
4) You are in a heavily technological or regulated industry and part of the zor’s obligations are to keep you abreast of changes and adjust the model accordingly AND there are no trade associations that can fulfill the gap.
FuwaFuwaUsagi
FuwaFuwaUsagi wrote on March 18, 2008 @ 3:27 pm:
Great points as always.