Why is this rider being signed in relation to the Bft Multi-Unit Agreement?

According to Bft's 2025 Franchise Disclosure Document, the rider to the Multi-Unit Agreement is being signed due to specific circumstances related to the developer's location, studio development, or sales activities within certain states. For Maryland, the rider is signed if the developer is a resident, the studios are developed in Maryland, the offer to sell is made there, or the offer to buy is accepted there. Similarly, for North Dakota, the rider is signed if an offer to sell is made in North Dakota or if the developer is domiciled there and the studio will be operated in North Dakota. In New York, the rider is required if an offer to sell or buy is made in the state, or if the developer is domiciled there and the studio will be developed in New York. For Minnesota, the rider is signed because the studios will be developed in Minnesota, or any of the offering or sales activity relating to the Multi-Unit Agreement occurred in Minnesota. Finally, for Washington, the rider is signed because the offer is directed into the state and received there, the developer is a resident, or the studios will be located or operated in Washington.

These state-specific riders modify the terms of the standard Multi-Unit Agreement to comply with franchise laws in those states. For example, the Maryland rider includes provisions related to insolvency, releases, governing law, jurisdiction, mediation, and mandatory binding arbitration, ensuring compliance with the Maryland Franchise Registration and Disclosure Law. The Washington rider addresses surety bonds, enforcement of covenants, cross-default provisions, injunctive relief, limitation of claims, and recourse against nonparty affiliates, aligning with the Washington Investment Protection Act. These modifications are crucial to protect the franchisee's rights and ensure the enforceability of the agreement within each specific state.

For a prospective Bft multi-unit developer, these riders highlight the importance of understanding the specific legal requirements in the states where they plan to operate. The riders demonstrate that the standard Multi-Unit Agreement is not universally applicable and needs to be adapted to local laws. This could involve additional costs, such as obtaining surety bonds, and may affect the developer's rights and obligations under the agreement. It is essential for developers to carefully review these riders with legal counsel to fully understand their implications and ensure compliance with all applicable state laws.