Does the Bee Organized General Release apply to violations of state franchise rules?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
Amendments to the Bee Organized Franchise Agreement:
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, the parties to the attached Bee Organized Enterprises, LLC Franchise Agreement (the "Franchise Agreement"), as follows:
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- The franchise agreement provides that disputes are resolved through arbitration. A Maryland franchise regulation states that it is an unfair or deceptive practice to require a franchisee to waive its right to file a lawsuit in Maryland claiming a violation of the Maryland Franchise Law. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable.
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- The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
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- Article 18.G. of the Franchise Agreement, under the heading "Choice of Law, Non-Binding Mediation, Binding Arbitration, and Consent to Jurisdiction," shall be amended by the addition of the following statement added to Article 18.G. of the Franchise Agreement:
- A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
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- Article 18.I. of the Franchise Agreement, under the heading "Limitations of Claims," shall be amended by the addition of the following statement added to Article 18.I. of the Franchise Agreement:
Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise.
A general release required as a condition of renewal, sale and/or assignment or transfer of a Franchise Agreement shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, the enforceability of a general release concerning violations of state franchise rules varies by state. For Maryland, New York, North Dakota, and Rhode Island, the FDD includes specific amendments stating that general releases do not apply to liabilities or claims arising under their respective state franchise laws. This means that franchisees in these states retain their rights and protections under state franchise laws, even if they sign a general release.
In Maryland, the amendment explicitly states that general releases required for renewal, sale, or transfer of the franchise do not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. Furthermore, any statement or acknowledgement signed by a franchisee cannot waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Bee Organized. Similarly, New York's amendment ensures that no agreement signed by a franchisee waives claims under New York General Business Law.
For North Dakota franchisees, provisions requiring them to sign a general release upon renewal of the Franchise Agreement are not enforceable. Rhode Island's amendment specifies that any general release as a condition of renewal, termination, or transfer will be void with respect to claims under the Rhode Island Franchise Investment Act. These state-specific amendments provide additional protection to franchisees by ensuring that they do not inadvertently waive their rights under state laws when signing standard franchise agreements or releases.
In Michigan, the FDD states that the state prohibits certain unfair provisions that are sometimes in franchise documents. One such provision is a requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel that deprives them of rights and protections provided in the Michigan Franchise Investment Law. However, the Michigan FDD amendment does not preclude a franchisee, after entering into a Franchise Agreement, from settling any and all claims. In Virginia, the FDD states that it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in Bee Organized's Franchise Agreement do not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable. Therefore, prospective franchisees should carefully review the specific amendments and provisions for their state to understand the extent to which general releases are enforceable and how state laws protect their rights.