What is the effect of state law on the 360 Painting franchise agreement provisions?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR VIRGINIA FRANCHISEES
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the Franchise Disclosure Document for 360 Painting, LLC for use in the Commonwealth of Virginia shall be amended as follows:
Item 5, Additional Disclosures. The following statement is added to Item 5:
The Virginia State Corporation Commission's Division of Securities and Retail Franchising requires us to defer payment of the initial franchise fee and other initial payments owed by franchisees to the franchisor until the franchisor has completed its pre-opening obligations under the franchise agreement.
Item 17, Additional Disclosure. The following statements are added to Item 17.g. and Item 17.h.
AMENDMENT TO 360 PAINTING, LLC FRANCHISE AGREEMENT FOR THE STATE OF INDIANA
("Franchisee" or "you") and 360 Painting, LLC ("Franchisor"), dated (the the Franchise Agreement (the "Amendment"). "Franchise Agreement") shall be amended by the following, which should be considered an integral part of Indiana Law Modification through 23-2-2-2.5-51, the parties to the Franchise Agreement agree as follows: In recognition of the requirements of the Indiana Deceptive Franchise Practices Law, Indiana Code §§ 23- 2-2.7-1 through 23-2-2.7-10, and the Indiana Franchise Disclosure Law, Indiana Code §§ 23-2-2-2.5-1 1. inconsistent with the terms of the Franchise Agreement.
If any of the provisions of the Franchise Agreement concerning termination and non-renewal, governing law, venue for litigation or arbitration, modification, covenants not to compete or any limitations period on the time in which claims may be brought are inconsistent with either the Indiana Deceptive Franchise Practices Law or the Indiana Franchise Disclosure Law, then such laws will apply to the extent 2.
Sections 3.2(viii) and 17.4(iii) of the Franchise Agreement each contain a provision requiring a extent inconsistent with the Indiana Deceptive Franchise Practices Law, IC § 23-2-2.7-1(5). general release as a condition to renewal or transfer of the franchise.
Each provision is inapplicable to the 3.
No representation or acknowledgment by the Franchisee in the Franchise Agreement is intended to and protections provided in the Indiana Franchise or shall act as a release, assignment, novation, waiver or estoppel to deprive the Franchisee of the rights under the Indiana Deceptive Franchise Practices Law.
Disclosure Law or to relieve any person of any liability 4.
Each of the provisions of this Amendment will be effective only to the extent, with respect to such Deceptive Franchise Practices Act are met independently without reference to this Amendment. provision, that the jurisdictional requirements of the Indiana Franchise Disclosure Law and the Indiana 5. govern.
Except as otherwise provided in this Amendment, all 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.
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR INDIANA FRANCHISEES
The Indiana Deceptive Franchise Practices Law (Indiana Code 23-2-2.7) contains certain laws governing the relationship between a Franchisor and Franchisee. Certain of these laws conflict with provisions contained in our customary Franchise Agreement and related documents. Set forth below is an overview of certain disclosures contained in the attached Franchise Disclosure Document which are amended by virtue of the Indiana law.
-
- The Franchise Agreement and related documents by and between us and you, as an Indiana franchisee, will be governed by Indiana law and not the law of the Commonwealth of Virginia.
-
- You, as an Indiana franchisee, have the right to litigate in Indiana and are not restricted to the requirements in the Franchise Agreement to sue only in Albemarle Virginia.
-
- The covenants of non-competition with respect to you, as an Indiana franchisee, will be limited to an area equal to the protected area granted to you and other Franchisees.
-
- Indiana law prohibits a prospective general release of claims subject to the Indiana Deceptive Franchise Practices Law.
-
- The reservation of rights to any specified remedy or limitation of remedies available to you, as an Indiana franchise, contained in Sections 19.1 and 27.4 of the Franchise Agreement is subject to the provisions of the Indiana Deceptive Franchise Practices Law [IC 23-2-2.7-1(10)].
-
- The Sections in the Franchise Agreement that relate to termination, non-renewal, governing law, venue for litigation, modification, covenants not to compete and any limitations period for bringing claims are only applicable to the extent they are not inconsistent with or prohibited by Indiana law. Indiana law will control to the extent of any inconsistency or prohibition.
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR MARYLAND FRANCHISEES
Item 5, Additional Disclosure:
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.
Item 17, Additional Disclosures:
Our termination of the Franchise Agreement because of your bankruptcy may not be enforceable under applicable federal law (11 U.S.C.A. 101 et seq.).
You may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.
The general release required as a condition of renewal, sale and/or assignment/transfer will not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
Additional Disclosures:
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.
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR MINNESOTA FRANCHISEES
To the extent the Minnesota Franchise Act, Minn. Stat. §§80C.01 – 80C.22 applies, the terms of this Addendum apply.
Items 5 and 7, Additional Disclosures:
All initial fees and payments due to us before you open your Business are deferred until we complete our pre-opening obligations to you and you open your Business.
State Cover Page and Item 17, Additional Disclosures:
Minn. Stat. Sec. 80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be co
-
- Sections 3.2(ix) and 17.4(iii) of the Franchise Agreement each contain a provision requiring a general release as a condition of renewal or transfer of the franchise. Such release will exclude claims arising under the General Business Law of New York State, Article 33, Sections 680 through 695, and the regulations issued thereunder.
-
- No representation or acknowledgment by the Franchisee in the Franchise Agreement is intended to or shall act as a release, assignment, novation, waiver or estoppel which would relieve a person from any duty or liability imposed by Article 33, Sections 680 through 695, of the General Business Law of the State of New York and the regulations issued thereunder.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting acknowledges that state laws can modify the standard franchise agreement to protect franchisees. For instance, the FDD includes addenda for franchisees in California, Indiana, Maryland, Minnesota and New York, addressing specific legal requirements in those states. These addenda highlight how certain provisions of the franchise agreement are superseded or amended to comply with state franchise laws.
In Indiana, the addendum clarifies that Indiana law governs the franchise agreement, not Virginia law, and Indiana franchisees have the right to litigate in Indiana, regardless of what the standard agreement says. The addendum also limits non-competition covenants to the franchisee's protected area and prohibits prospective general releases of claims under Indiana's Deceptive Franchise Practices Law. Similarly, in Maryland, the addendum ensures that franchisees can bring lawsuits in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, and any claims must be brought within 3 years after the grant of the franchise. The general release required as a condition of renewal, sale and/or assignment/transfer will not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
For New York, no representation or acknowledgment by the Franchisee in the Franchise Agreement is intended to or shall act as a release, assignment, novation, waiver or estoppel which would relieve a person from any duty or liability imposed by Article 33, Sections 680 through 695, of the General Business Law of the State of New York. In Virginia, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires 360 Painting to defer payment of the initial franchise fee and other initial payments owed by franchisees to the franchisor until the franchisor has completed its pre-opening obligations under the franchise agreement. These state-specific addenda demonstrate 360 Painting's effort to comply with varying state regulations, ensuring that franchisees' rights are protected under local laws.
These modifications are crucial for prospective franchisees because they ensure that the franchise agreement complies with local laws, potentially offering greater protection and rights than the standard agreement might provide. Franchisees should carefully review the addendum specific to their state and understand how it modifies the standard franchise agreement. This ensures they are aware of their rights and obligations under the laws of their state.