What is the effect of state law on the 360 Painting franchise disclosure document?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sec. 1051 et | | | | | seq.). |
EXHIBIT H
TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT
STATE-SPECIFIC ADDENDA
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR FRANCHISEES IN FRANCHISE REGISTRATION STATES
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 CALIFORNIA FRANCHISEES
To the extent the California Franchise Investment Law, Cal. Corp. Code §§ 31000-31516 or the California Franchise Relations Act, Cal. Bus. & Prof. Code §§20000-20043 applies, the terms of this Addendum apply.
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT 14 DAYS PRIOR TO EXECUTION OF AGREEMENT.
OUR WEBSITE AT www.360painting.com HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION. ANY COMPLAINTS CONCERNING THE CONTENT OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION AT www.dfpi.ca.gov.
SECTION 31125 OF THE CALIFORNIA CORPORATIONS CODE REQUIRES US TO GIVE YOU A DISCLOSURE DOCUMENT, IN A FORM CONTAINING THE INFORMATION THAT THE COMMISSIONER MAY BY RULE OR ORDER REQUIRE, BEFORE A SOLICITATION OF A PROPOSED MATERIAL MODIFICATION OF AN EXISTING FRANCHISE.
Item 3, Additional Disclosure:
Neither we nor any person identified in Item 2 is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S. C.A. 78a et seq., suspending or expelling such persons from Franchise in such association or exchange.
Item 6, Additional Disclosure:
The highest interest rate allowed by California is 10% annually.
Item 17, Additional Disclosures:
The franchise agreement requires franchisee to execute a general release of claims upon renewal or transfer of the franchise agreement. California Corporations Code Section 31512 provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of that law or any rule or order there under is void. Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Section 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 – 20043).
The franchise agreement requires application of the laws of Virginia. This provision may not be enforceable under California law.
The franchise agreement contains a liquidated damages clause. Under California Civil Code §1671, certain liquidated damages clauses are unenforceable.
California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the franchise agreement contains a provision that is inconsistent with the law, the law will control.
The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. §101 et seq.)
The franchise agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
Any litigation must be pursued in courts located in the county and state in which we maintain our principal place of business (currently Albemarle County, Virginia). Each party will bear its own expenses, including attorneys' fees. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281 and the Federal Arbitration Act) to any provision of a franchise agreement restricting venue to a forum outside the State of California.
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR ILLINOIS FRANCHISEES
To the extent the Illinois Franchise Disclosure Act, Ill. Comp. Stat. §§705/1 – 705/44 applies, the terms of this Addendum apply.
Additional Risk Factors:
THE FRANCHISOR MAY SUBCONTRACT PAINTING, DECORATING AND WALL FINISHING SERVICES WITHIN YOUR "PROTECTED" TERRITORY TO OTHER (INCLUDING TO OTHER FRANCHISEES) WITH NO COMPENSATION TO YOU.
Item 5, Additional Disclosures. The following statements are added to Item 5:
Item 5 is supplemented to reflect that we must defer the payment of all initial fees payable to us until we have fulfilled all of our material pre-opening obligations to you and you have commenced doing business pursuant to the Franchise Agreement. The Illinois Attorney General's Office imposed this deferral requirement due to Franchisor's financial condition.
Item 17, Additional Disclosures. The following statements are added to Item 17:
The Illinois Franchise Disclosure Act governs the Franchise Agreement. Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration outside of Illinois.
Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
Your rights upon termination and non-renewal of a franchise agreement are set forth in section 19 and 20 of the Illinois Franchise Disclosure Act.
AMENDMENT TO 360 PAINTING, LLC FRANCHISE AGREEMENT FOR THE STATE OF ILLINOIS
| The 360 Painting, LLC Franchise Agreement between | |
|---|---|
| ("Franchisee" or "you") and 360 Painting, LLC ("Franchisor"), dated (the "Franchise Agreement") shall be amended by the addition of the following language, which should be | |
| considered an integral part of the Franchise Agreement (the "Amendment"). |
Illinois Law Modification
The Illinois Franchise Disclosure Act requires that certain provisions contained in franchise documents, including the Franchise Agreement, be amended to be consistent with Illinois law. Therefore, to the extent that the Franchise Agreement contains provisions that are inconsistent with the following, the modification set forth below shall be controlling:
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- Illinois law governs the agreements between the parties to this franchise.
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- Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration outside of Illinois.
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- Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
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- Your rights upon termination and non-renewal of a franchise agreement are set forth in Sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- THE FRANCHISOR MAY SUBCONTRACT PAINTING, DECORATING AND WALL FINISHING SERVICES WITHIN YOUR "PROTECTED" TERRITORY TO OTHER (INCLUDING TO OTHER FRANCHISEES) WITH NO COMPENSATION TO YOU.
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- Sections 4.1 and 4.7 of the Franchise Agreement are modified to reflect that Franchisor must defer the payment of all initial fees payable to Franchisor until Franchisor has fulfilled all of its material preopening obligations to Franchisee and Franchisee has commenced doing business pursuant to the Franchise Agreement. The Illinois Attorney General's Office imposed this deferral requirement due to Franchisor's financial condition. Accordingly, notwithstanding anything to the contrary contained in the Franchise Agreement, Franchisee must pay Franchisor the Franchise Fee and initial technology fee payable to Franchisor at the time Franchisor has fulfilled all of its material pre-opening obligations to Franchisee and Franchisee has commenced doing business pursuant to the Franchise Agreement.
360 PAINTING, LLC [Name of Entity or Individual] Name: Paul Flick CEO [Signature Page to Amendment to 360 Painting, LLC Franchise Agreement for the State of Illinois]
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.
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- 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.
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- 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.
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Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 FDD, state laws significantly impact the 360 Painting franchise, necessitating state-specific addenda to the standard Franchise Disclosure Document. These addenda address variations in franchise laws across different states, ensuring compliance and protecting the rights of franchisees. For instance, certain states require specific disclosures or modifications to the franchise agreement. These variations can cover aspects such as non-waiver provisions, governing law, venue for litigation, and limitations on non-compete covenants.
For franchisees in franchise registration states, no statement can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor. In California, the California Franchise Investment Law requires that all proposed agreements be delivered with the FDD 14 days before execution. The FDD also notes that the website has not been reviewed or approved by the California Department of Financial Protection and Innovation. The highest interest rate allowed by California is 10% annually.
In Maryland, the Securities Commissioner requires financial assurance based on the franchisor's financial condition, deferring initial fees until pre-opening obligations are met. Franchisees may bring lawsuits in Maryland for claims under the Maryland Franchise Registration and Disclosure Law within 3 years of the franchise grant, and general releases do not apply to liabilities under this law. For Indiana franchisees, the franchise agreement is governed by Indiana law, allowing litigation in Indiana and limiting non-competition covenants to the protected area. Indiana law also prohibits prospective general releases of claims and controls in cases of inconsistency with the franchise agreement.
For New York franchisees, general releases required for renewal or transfer exclude claims under New York's General Business Law. The Virginia Retail Franchising Act requires deferral of initial franchise fee payments until pre-opening obligations are completed. These state-specific addenda and amendments ensure that 360 Painting's franchise agreements comply with local regulations, providing franchisees with the protections and rights mandated by their state laws. Prospective franchisees should carefully review the addendum for their specific state to understand how local laws affect their franchise agreement.