What right does the Maryland franchise regulation state that a Chatime franchisee cannot be required to waive?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Mayland 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 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, Maryland franchise regulations protect a franchisee's right to file a lawsuit in Maryland for violations of the Maryland Franchise Law. Specifically, it is considered an unfair or deceptive practice to require a franchisee to waive this right.
This protection is included in an amendment to Clause 16.3 of the Chatime Franchise Agreement. The amendment explicitly states that the standard arbitration clause in the agreement cannot force a franchisee to waive their right to sue Chatime in Maryland courts if they believe Chatime has violated the Maryland Franchise Law.
However, the FDD notes there is some dispute as to whether this forum selection requirement is legally enforceable, given the Federal Arbitration Act. This means that while Maryland law intends to protect a franchisee's right to sue in Maryland, federal law might override this protection, potentially forcing disputes into arbitration. Prospective franchisees should seek legal counsel to understand the implications of this clause and how it might affect their rights.