To what extent is each provision of the addendum effective regarding the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law for a Cinnaholic franchise?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
cial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens.
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- The general release language required as a condition of renewal, sale and/or assignment or transfer shall apply except for claims arising under the Maryland Franchise Registration and Disclosure Law.
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- Under certain circumstances, the Agreement requires Franchisee to submit to a court proceeding in the State where Franchisor's principal executive office is located. These provisions may run contrary to the Maryland Franchise Registration and Disclosure Law. Therefore, nothing will preclude Franchisee from being able to enter into litigation with Franchisor in Maryland.
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- Any claims arising under the Maryland Franchisor Registration and Disclosure Law must be brought within three years after the grant of the franchise.
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- Attached to this Addendum as Schedule 1 is the form of the general release that Franchisee and its owners will sign, as, and if, required by Section 2.2 or Section 19.4 of the Agreement.
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- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- Each provision of this Addendum will be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law are met independently without reference to this Addendum.
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- To the extent this Addendum is inconsistent with any terms or conditions of the Agreement or the Exhibits or Schedules thereto, the terms of this Addendum shall govern.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, an addendum is included to modify the franchise agreement for franchisees in Maryland, addressing specific requirements of Maryland's Franchise Registration and Disclosure Law. Each provision of this addendum is effective only to the extent that the jurisdictional requirements of Maryland law are independently met, without relying on the addendum itself. This ensures that the addendum's provisions are valid and enforceable under Maryland law.\n\nSeveral specific modifications are made to the standard Cinnaholic franchise agreement to comply with Maryland law. The general release language required for renewal, sale, assignment, or transfer does not apply to claims arising under the Maryland Franchise Registration and Disclosure Law, protecting franchisees' rights to pursue such claims. While the standard agreement might require franchisees to submit to court proceedings in the state where Cinnaholic's principal office is located, the addendum clarifies that franchisees are not precluded from litigating with Cinnaholic in Maryland. Any claims under Maryland's franchise law must be brought within three years after the franchise grant.\n\nFurthermore, no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Cinnaholic or its representatives. This provision supersedes any conflicting terms in other documents. The addendum also addresses Cinnaholic's financial condition, requiring that all initial fees and payments from franchisees be deferred until Cinnaholic completes its pre-opening obligations under the franchise agreement. This financial assurance was mandated by the Maryland Securities Commissioner. To the extent that the addendum is inconsistent with the franchise agreement, the terms of the addendum will govern, ensuring compliance with Maryland law.