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Federal Court Enforces Broad Franchise Release And Dismisses Franchisee Claims With Prejudice

We are pleased to share a significant victory for our client, MDR United LLC, and an important federal court decision for the franchise community addressing contractual releases, franchise assignments, choice-of-law provisions, contractual limitations periods, and the enforceability of agreements between sophisticated parties.

On July 28, 2026, U.S. District Judge Aileen M. Cannon of the Southern District of Florida issued a 27-page decision in Labento, LLC v. MDR United, LLC and Joshua Hoffmann, Case No. 25-81535-CIV-CANNON/McCabe.

The Court sustained Defendants’ objections, accepted the Magistrate Judge’s Report and Recommendation in part and rejected it in part, and dismissed Plaintiff’s Complaint with prejudice.

Pennsylvania Law Governed All of Plaintiff’s Claims

As a threshold matter, the Court held that Pennsylvania law applied to all of Plaintiff’s claims, including its claims for fraud, misrepresentation, and violations of Florida statutes.

The Court relied on the Franchise Agreements, the parties’ Multi-Unit Addendum, and the subsequent Assignment. The Court held that the Multi-Unit Addendum incorporated the Franchise Agreements and made their dispute-resolution and choice-of-law provisions applicable to claims arising out of or relating to the Addendum, which necessarily included claims arising out of or relating to the incorporated Franchise Agreements.

The Assignment also contained a separate Pennsylvania choice-of-law provision.

The Court therefore rejected the Report’s conclusion that Florida law applied to Plaintiff’s non-contract claims and held that Pennsylvania law governed the dispute.

This aspect of the decision underscores the importance of drafting franchise agreements, addenda, assignments, guaranties, and related documents consistently so that the parties’ choice of governing law clearly applies to both contractual and non-contractual claims.

The Court Considered The Assignment At The Pleading Stage

Plaintiff’s asserted right to bring the lawsuit depended upon an Assignment through which the original franchisee transferred his interests in the Franchise Agreements to Plaintiff.

Although the Assignment was not attached to the Complaint, the Court held that it could properly be considered at the motion-to-dismiss stage under the incorporation-by-reference doctrine.

The Complaint expressly referenced the Assignment, the Assignment was central to Plaintiff’s standing and claims, and its authenticity was not disputed. Indeed, Plaintiff acknowledged that the Assignment was the source of its asserted authority to bring suit.

The ruling provides a reminder that a party cannot necessarily avoid contractual defenses at the pleading stage by omitting a central and undisputed agreement from its complaint.

The General Release Barred Claims Based On Pre-Release Conduct

The Court enforced the broad general release contained in the Assignment.

The release was executed by the Assignor and Assignee and covered obligations, claims, and causes of action “whatsoever, whether known or unknown,” that the Assignor “have, had, or might claim to have” through the date of the Assignment. It expressly included claims arising from the offer, sale, and transfer of the franchise rights and claims arising under state franchise regulations or franchise relationship laws.

Plaintiff argued that the release could not bar claims that had not yet accrued when the Assignment was executed. Judge Cannon rejected that position.

Applying Pennsylvania law and the Third Circuit’s published decision in Three Rivers Motors Co. v. Ford Motor Co., the Court held that the language of the release reflected an intent to resolve all covered claims arising from conduct predating the Assignment, including claims that were unknown or had not yet accrued.

The Court found that the release in the Assignment was even more comprehensive than the release enforced by the Third Circuit in Three Rivers.

The Court expressly considered two recent decisions from the Eastern District of Pennsylvania involving MDR United and the same general release: MDR United LLC v. Flex Nine Exteriors, Inc. and MDR United LLC v. Backporch Partners, Inc.

Those decisions concluded that the release did not encompass unaccrued claims. Judge Cannon disagreed, finding that their analyses could not be reconciled with the Third Circuit’s treatment of “known and unknown” claims in Three Rivers.

The Court reasoned that, under Three Rivers, language releasing known and unknown claims can be sufficient to encompass unaccrued claims when the agreement demonstrates a clear intent to leave nothing open or unsettled between the parties.

Accordingly, the Court held that the Assignment’s general release barred all of Plaintiff’s non-contract claims, each of which was based upon alleged conduct occurring before the Assignment was executed.

Plaintiff Lacked Standing To Assert The Non-Contract Claims

The Court separately held that Plaintiff lacked standing to pursue its claims for fraudulent misrepresentation, negligent misrepresentation, violations of the Florida Deceptive and Unfair Trade Practices Act, and violations of the Florida Franchise Act.

The Assignment did not transfer the original franchisee’s claims arising from pre-assignment conduct. To the contrary, the Assignment stated that the parties had not assigned or transferred any claim or cause of action released through the Assignment.

The Court further held that the non-contract claims could not have been assigned in any event because Pennsylvania law generally prohibits the assignment of unliquidated tort claims.

The standing ruling and the general release therefore provided separate and independent grounds for dismissing Plaintiff’s non-contract claims.

The Fraud And Rescission Waivers Were Enforceable

The Court also addressed the Franchise Agreements’ express waivers concerning fraud, misrepresentation, and rescission.

The Agreements provided that the franchisee waived the right to obtain any remedy based upon alleged fraud, misrepresentation, or deceit by the franchisor, including rescission. The Agreements also included integration and no-reliance provisions.

The Magistrate Judge’s Report had reasoned that Defendants could not rely on provisions of the Franchise Agreements because Plaintiff requested rescission of those Agreements.

Judge Cannon rejected that reasoning.

The Court explained that allowing a party to avoid a rescission waiver merely by requesting rescission would effectively render the waiver meaningless. A rescission waiver has significance precisely when a party seeks rescission.

After reviewing both Pennsylvania and Florida law, the Court concluded the specific contractual provisions at issue barred claims for fraud, misrepresentation, and rescission under the standards of either jurisdiction.

Although the Court ultimately dismissed the non-contract claims on standing and release grounds, its treatment of the waiver provisions offers additional analysis relevant to parties drafting and enforcing franchise agreements.

The One-Year Contractual Limitations Period Barred The Remaining Claims

Plaintiff’s remaining claims alleged breach of contract and breach of the implied covenant of good faith and fair dealing.

The Franchise Agreements required any action to be brought within one year after the underlying act or occurrence, or within one year after the franchisee became aware of facts or circumstances reasonably indicating that it might have a claim, whichever occurred sooner.

Plaintiff alleged in its own Complaint that its representatives confronted MDR United concerning their grievances on October 2, 2024.

Based on that allegation, the Court concluded that Plaintiff was aware of facts reasonably indicating that it might have a contractual claim no later than October 2, 2024. The contractual filing period therefore expired on October 2, 2025.

Plaintiff did not commence the action until October 24, 2025.

The Court held that the one-year contractual limitations period was valid and enforceable under Pennsylvania law and barred Plaintiff’s contract claims.

The Complaint Was Dismissed With Prejudice

The result was comprehensive.

Following de novo review, the Court concluded that: (1) Plaintiff lacked standing to assert its non-contract claims; (2) The Assignment’s general release independently barred claims based upon pre-release conduct; and (3) The Franchise Agreements’ one-year contractual limitations period barred Plaintiff’s remaining contract claims.

The Court dismissed the Complaint in its entirety with prejudice and directed the Clerk of Court to close the case.

Practical Significance For Franchise Systems

The decision suggests several practical drafting considerations for franchisors, franchisees, and their counsel. The following are practical takeaways from the ruling, rather than additional holdings made by the Court.

Franchise agreements, assignments, addenda, guaranties, and related transaction documents should contain coordinated and consistent provisions concerning governing law, releases, assignments, contractual waivers, dispute resolution, and limitations periods.

A release intended to provide comprehensive finality should clearly identify the parties and claims covered, address known and unknown claims, and define the time period and conduct subject to the release.

An assignment should also state expressly whether legal claims are being transferred and whether claims covered by a release are excluded from the assignment.

Fraud, misrepresentation, no-reliance, integration, and rescission-waiver provisions should be drafted clearly and evaluated under the law selected by the parties.

Contractual limitations periods should likewise be drafted unambiguously and reviewed for reasonableness under the governing law.

The enforceability of these provisions will always depend on the precise contractual language, governing law, procedural posture, and facts of the particular dispute. Nevertheless, the decision reinforces the importance of careful drafting and of treating assignments, releases, and related transaction documents as substantive risk-management tools rather than administrative formalities.

We are proud to have represented MDR United, LLC and Joshua Hoffmann in securing this result.

MDR United and Mr. Hoffmann were represented by attorneys JoyAnn Kenny, Christopher B. Alexander, and Frank Reino of FisherZucker LLC.

The decision is Labento, LLC v. MDR United, LLC and Joshua Hoffmann, Case No. 25-81535-CIV-CANNON/McCabe, in the United States District Court for the Southern District of Florida.