factual

For 360 Painting franchisees in Maryland, what is the subject of the modification to the franchise agreement?

360_Painting Franchise · 2025 FDD

Answer from 2025 FDD Document

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.

AMENDMENT TO 360 PAINTING, LLC FRANCHISE AGREEMENT FOR THE STATE OF MARYLAND

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)

What This Means (2025 FDD)

According to the 2025 FDD, the amendment to the 360 Painting franchise agreement for Maryland franchisees addresses several key areas. First, it stipulates that 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 financial assurance to the franchisee, mandated by the Maryland Securities Commissioner due to the franchisor's financial condition. This means a new franchisee in Maryland won't have to pay the initial franchise fee until 360 Painting has fulfilled their obligations, such as site selection assistance or initial training. This reduces the franchisee's upfront financial risk.

Additionally, the amendment clarifies the franchisee's rights under Maryland law. Specifically, it states that the termination of the Franchise Agreement due to the franchisee's bankruptcy may not be enforceable under federal law. It also confirms that franchisees can bring lawsuits in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, with a three-year statute of limitations. Furthermore, any general release required as a condition of renewal, sale, or transfer will not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. This ensures that franchisees retain their legal rights and protections under Maryland franchise law.

Finally, the amendment emphasizes that no statement, questionnaire, or acknowledgment signed by the franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by 360 Painting. This provision supersedes any conflicting terms in other documents executed in connection with the franchise, reinforcing the franchisee's ability to pursue legal remedies if they believe they were misled or defrauded. This is a significant protection for franchisees, ensuring they cannot inadvertently forfeit their legal rights through standard contractual language.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.