What is the effect of the Maryland Amendment on the existing terms, covenants, and agreements in the 360 Painting Franchise Agreement?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
The Maryland Franchise Registration and Disclosure Law requires that certain provisions contained in franchise documents, including the Franchise Agreement, be amended to be consistent with Maryland law. Therefore, to the extent that the Franchise Agreement contains provisions that are inconsistent with the following, the modifications set forth below shall be controlling:
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- While the Franchise Agreement requires you to disclaim the occurrence and/or acknowledge the nonoccurrence of acts which would constitute a violation of franchise laws, such representation and acknowledgments are not intended to nor shall they act as a release, estoppel or waiver of any liability or claims arising under the Maryland Franchise Registration and Disclosure Law.
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- While the Franchise Agreement requires litigation to be conducted only in a court in the Commonwealth of Virginia, you may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
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- If you are required to sign a general release of claims pursuant to the Franchise Agreement as a condition of renewal, sale and/or assignment/transfer of your franchise, such release will not apply with respect to any liability under the Maryland Franchise Registration and Disclosure Law.
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- Any claims arising under the Maryland Franchise Registration and Disclosure Law may be brought within three (3) years after the grant of the franchise.
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- Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.
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- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- Each provision of this Amendment will be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law are met independently without reference to this Amendment.
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- Except as otherwise provided in this Amendment, all of the other terms, covenants and agreements in the Franchise Agreement shall remain the same, and the Franchise Agreement, as amended, shall continue in full force and effect. To the extent this Amendment is inconsistent with any terms or conditions of the Franchise Agreement or any attachments thereto, the terms of this Amendment shall govern and control.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 FDD, the Maryland Amendment to the 360 Painting Franchise Agreement primarily ensures compliance with Maryland franchise law. The amendment specifies that if any part of the original agreement conflicts with the Maryland Franchise Registration and Disclosure Law, the terms of the amendment will take precedence. This means that certain provisions of the franchise agreement are modified to align with Maryland law, offering additional protections to franchisees in Maryland. These modifications address specific areas such as waivers, litigation venues, and general releases, ensuring that franchisees do not inadvertently relinquish rights granted to them under Maryland law.
Specifically, the amendment clarifies that franchisees in Maryland cannot be compelled to waive claims or acknowledge actions that would violate franchise laws. It also allows franchisees to bring lawsuits in Maryland, even if the original agreement stipulates Virginia as the exclusive venue for litigation. Furthermore, any general release required for renewal, sale, or transfer of the franchise will not apply to liabilities arising under Maryland's franchise laws. These changes are designed to protect the franchisee's rights and ensure they are not disadvantaged by standard clauses in the franchise agreement that might conflict with Maryland law.
In addition to legal protections, the Maryland Securities Commissioner requires 360 Painting to provide financial assurance due to the franchisor's financial condition. As a result, all initial fees and payments owed by Maryland franchisees are deferred until 360 Painting completes its pre-opening obligations. This deferral provides a financial safeguard for new franchisees, ensuring they are not paying fees before 360 Painting has fulfilled its responsibilities in setting up the franchise. This requirement reflects a proactive approach to protecting franchisees' investments, especially when the franchisor's financial stability is a concern.
Despite these specific modifications, the amendment explicitly states that all other terms, covenants, and agreements in the Franchise Agreement remain in full force and effect. This ensures that the core operational and business aspects of the franchise relationship are unchanged, unless they directly conflict with the stipulations made in the Maryland Amendment. This balanced approach allows 360 Painting to maintain a consistent franchise model while adhering to the specific legal and financial requirements of operating in Maryland.