Can a franchisee waive liability incurred under the Maryland Franchise Registration and Disclosure Law through a disclaimer related to the Alloy franchise agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
The following applies to franchises and franchisees subject to Maryland statutes and regulations. The Item number corresponds to those in the main body.
Items 5 and 7
Due to the financial condition of the Franchisor, the Maryland Securities Commissioner has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Maryland Securities Division. A copy of the surety bond is attached as an exhibit to the Maryland addenda pages. The surety bond covers the initial franchise fee for a single unit franchise or an area development franchise for three units, which at this time is all we are offering and selling in the State of Maryland. We will not offer and sell any other area development franchises in the State of Maryland.
Item 17
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- Any claims arising under the Maryland Franchise Registration and Disclosure law must be brought within 3 years after we grant you a ALLOY franchise.
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- 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.)
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- Franchisee may sue Franchisor in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
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- 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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 Alloy Franchise Disclosure Document, several provisions ensure that franchisees in Maryland cannot waive liability under the Maryland Franchise Registration and Disclosure Law. This protection is implemented through addenda to both the Franchise Agreement and the Area Development Agreement, specifically designed to comply with Maryland statutes and regulations. These addenda explicitly state that no clause, disclaimer, or statement signed by a franchisee can waive any liability incurred under this law.
Specifically, the addendum to the Franchise Agreement includes stipulations that the general release required for renewal or transfer of the franchise does not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. Similarly, the addendum to the Area Development Agreement ensures that any provision requiring a disclaimer of acts that would violate the Maryland Franchise Registration and Disclosure Law will not act as a waiver of liability. This means Alloy franchisees in Maryland retain their rights and protections under the state's franchise laws, regardless of any waivers or releases they might sign in other contexts.
Furthermore, Alloy's FDD states that franchisees may bring lawsuits in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, and these claims must be brought within three years after the date of the Franchise Agreement or Area Development Agreement. This provision reinforces the franchisee's right to seek legal recourse within the state, ensuring that Alloy franchisees are not compelled to resolve disputes in a less favorable jurisdiction. These measures collectively aim to protect franchisees' rights and ensure compliance with Maryland franchise laws.