Does the Maryland Franchise Registration and Disclosure Law allow City Publications to include representations requiring prospective franchisees to assent to a release, estoppel, or waiver of liability?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR THE STATE OF MARYLAND
ITEM 17 of the Disclosure Document is amended to add the following:
- ◼ Under the Maryland Franchise Registrations and Disclosure Law, Md. Code Ann. Bus. Reg. §14- 201 et seq., no general release shall be required as a condition of renewal and/or transfer which is intended to exclude claims under the Maryland Franchise Registration and Disclosure Law.
- ◼ Any litigation between Franchisee and Franchisor may be instituted in any court of competent jurisdiction, including a court in the State of Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
- ◼ Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.
- ◼ In the event of a conflict of laws to the extent required by the Maryland Franchise Registration and Disclosure Law, Maryland law shall prevail.
- ◼ The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.).
- ◼ Item 5 of the Disclosure document is amended to add the following: Based on our financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until we complete our preopening obligations under the franchise agreement.
- ◼ 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
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the Maryland Franchise Registration and Disclosure Law impacts the enforceability of certain clauses within the franchise agreement. Specifically, any representations that would require a franchisee to release, waive, or estop themselves from liability are addressed.
The FDD indicates that any general release required for renewal or transfer of the franchise cannot exclude claims arising under the Maryland Franchise Registration and Disclosure Law. This means that while City Publications may include general release clauses, these clauses cannot prevent a franchisee from pursuing claims under Maryland franchise law.
Furthermore, the FDD states that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by City Publications. This provision supersedes any other conflicting terms in the franchise documents, reinforcing the protection afforded to franchisees under Maryland law. Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise.
In essence, while City Publications' standard franchise agreement might contain clauses that appear to limit liability or require releases, these clauses are modified by the Maryland addendum to ensure they do not infringe on the rights granted to franchisees under Maryland law. Prospective franchisees in Maryland should be aware of these protections and consult with legal counsel to fully understand their rights.