For Belocal franchises in Maryland, can a franchisee bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
rt) is supplemented with the following:
This 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. A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law to the extent required by such law, unless preempted by the Federal Arbitration Act.
- Item 17.c., "Requirements for you to renew or extend" (Franchise Agreement chart) and Item 17.m. "Conditions for our approval of transfer" (Franchise Agreement chart) are amended by the addition of the following:
The Code of Maryland Regulations, COMAR 02.02.08.16L., states that a 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. This may affect the enforceability of certain provisions in the Franchise Agreement relating to renewal, sale, assignment, or transfer of the Franchise Agreement.
4.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee in Maryland may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. However, this right is not absolute, as it is subject to the condition that it is 'to the extent required by such law, unless preempted by the Federal Arbitration Act.' This means that while Belocal franchisees generally retain the right to sue in Maryland courts for violations of Maryland franchise law, this right may be limited if the Federal Arbitration Act applies, potentially requiring disputes to be resolved through arbitration instead of litigation.
This provision is further clarified by stating that any claims under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise. This three-year statute of limitations is a critical deadline for franchisees to be aware of, as failure to bring a claim within this period could result in the claim being time-barred. Additionally, the FDD states that a 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. This protects the franchisee from unknowingly waiving their rights under Maryland franchise law when renewing, selling, or transferring their franchise.
In practical terms, this means that Belocal franchisees in Maryland have certain legal protections under state law that cannot be waived or contracted away. Belocal cannot force a franchisee to waive their right to sue for violations of Maryland franchise law, and any attempt to do so may be unenforceable. However, franchisees should be aware of the three-year statute of limitations and consult with an attorney to understand their rights and options if they believe Belocal has violated the Maryland Franchise Registration and Disclosure Law. The interplay between state franchise law and the Federal Arbitration Act can be complex, so legal advice is essential to navigate these issues effectively.