For claims arising under the Maryland Franchise Registration and Disclosure Law, in which state can a Bft franchisee bring suit?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
- The "Summary" sections of Item 17.v, entitled Choice of forum, and 17.w, entitled Choice of law, are amended to add the following:
A franchisee may bring suit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
- The following language is added to the end of the chart in Item 17:
Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.
The Multi-Unit Agreement and Franchise Agreement provide 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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, a franchisee may bring suit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. This stipulation is added to the "Summary" sections of Item 17.v, entitled Choice of forum, and 17.w, entitled Choice of law. This means that despite any clauses in the franchise agreement that might specify a different location or governing law, franchisees retain the right to file lawsuits related to Maryland franchise law violations within the state of Maryland.
This provision is particularly relevant because Maryland franchise regulations consider it an unfair or deceptive practice to force a franchisee to waive their right to sue in Maryland for violations of the Maryland Franchise Registration and Disclosure Law. However, the FDD also acknowledges a dispute regarding the enforceability of forum selection requirements due to the Federal Arbitration Act. This suggests that while Bft acknowledges the franchisee's right to sue in Maryland under Maryland franchise law, the interaction with federal arbitration laws could introduce complexities.
Furthermore, the FDD specifies that any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise. This time limit is crucial for franchisees to note, as failing to file a claim within this period could result in the claim being time-barred. Bft also states that any release required as a condition of renewal and/or assignment/transfer will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law.