What is the effect of the Maryland amendment on Casiola franchisees' ability to bring lawsuits?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
Amendments to the Casiola Franchise Agreement:
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, the parties to the attached Casiola Franchise 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.
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- All representations requiring prospective franchisees to assent to a release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, the Maryland amendment ensures that franchisees can bring lawsuits in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. This is a direct response to a Maryland franchise regulation that considers it an unfair or deceptive practice to require a franchisee to waive their right to sue under Maryland Franchise Law. The amendment specifically addresses concerns about the enforceability of arbitration clauses in the franchise agreement, acknowledging a dispute in light of the Federal Arbitration Act.
Specifically, the amendment to the Casiola franchise agreement states that a franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. Furthermore, any general release required as a condition of renewal, sale, or transfer of the franchise will not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. This means that Casiola franchisees in Maryland retain their legal rights under Maryland franchise law, even when signing releases for other purposes.
However, the Maryland amendment also imposes a limitation on claims, requiring that any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise. This means a Casiola franchisee needs to be aware of this deadline and act promptly if they believe they have a claim. The amendment also clarifies that representations requiring franchisees to release, estop, or waive liability will not act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.
In summary, the Maryland amendment to the Casiola franchise agreement strengthens the rights of franchisees in Maryland by allowing them to bring lawsuits under Maryland Franchise Law, preventing waivers of these rights, and setting a three-year limitation on claims. This amendment aims to protect franchisees from unfair practices and ensure compliance with Maryland franchise regulations.