For 360 Painting franchisees in Maryland, what does the additional language added to the Franchise Agreement constitute?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
AMENDMENT TO 360 PAINTING, LLC FRANCHISE AGREEMENT FOR THE STATE OF MARYLAND
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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 FDD, the additional language added to the 360 Painting Franchise Agreement for Maryland franchisees constitutes an amendment to the existing agreement. This amendment includes several specific provisions tailored to comply with Maryland franchise law. The document explicitly states that the language added should be considered an integral part of the Franchise Agreement.
One key aspect of the amendment addresses financial assurances required by the Maryland Securities Commissioner due to 360 Painting's financial condition. Specifically, all initial fees and payments owed by franchisees are deferred until 360 Painting completes its pre-opening obligations under the franchise agreement. This provides a level of financial protection to the franchisee, ensuring they don't pay fees upfront before 360 Painting fulfills its initial responsibilities.
Additionally, the amendment includes disclosures related to termination, lawsuits, and waivers under the Maryland Franchise Registration and Disclosure Law. For instance, 360 Painting's termination of the Franchise Agreement due to the franchisee's bankruptcy may not be enforceable under federal law. Franchisees are also permitted to bring lawsuits in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, with a three-year statute of limitations. The general release required for renewal, sale, or transfer does not apply to liabilities under this law. Furthermore, franchisees cannot waive claims or disclaim reliance on statements made by 360 Painting under applicable state franchise law, including fraud in the inducement. This provision supersedes any conflicting terms in other documents.
In summary, the state-specific addendum for Maryland franchisees aims to protect the franchisee's rights and ensure compliance with Maryland franchise laws. It modifies certain aspects of the standard Franchise Agreement to provide additional safeguards and disclosures relevant to operating a 360 Painting franchise in Maryland.