What is the purpose of the 'State Addenda' included as Exhibit 7 in the Bor Restoration FDD?

According to Bor Restoration's 2024 Franchise Disclosure Document, Exhibit 7 contains state addenda that amend the franchise agreement to comply with specific state laws. These addenda are crucial because franchise laws vary significantly from state to state, and these variations can impact a franchisee's rights and obligations. The inclusion of state-specific addenda ensures that the franchise agreement adheres to local regulations, providing a legally sound framework for both the franchisor and the franchisee.

For example, the Illinois addendum specifies that the Illinois Franchise Disclosure Act governs the interpretation and construction of the franchise agreement. It also sets time limits for bringing actions under the Act and clarifies that Illinois law governs jurisdiction and venue for court litigation. Furthermore, it voids any provision that designates jurisdiction or venue outside of Illinois, although arbitration outside of Illinois is permitted. These stipulations protect the franchisee by ensuring disputes are handled within the state's legal system and according to its laws.

Similarly, the Maryland addendum addresses specific issues such as the franchisee signing a general release as a condition of renewal, sale, termination, and franchise transfer. It clarifies that these covenants do not apply to liability under the Maryland Franchise Registration and Disclosure Law and that a franchisee can bring a lawsuit in Maryland for claims under this law. Additionally, it mandates that initial fees and payments be deferred until Bor Restoration completes its pre-opening obligations, providing financial protection to the franchisee. These addenda collectively ensure that the Bor Restoration franchise agreement complies with state-specific legal requirements, safeguarding the franchisee's rights and providing a clear understanding of their legal standing within their state.