Which section of the Cr3 American Exteriors Franchise Agreement is modified in the FDD?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
Item 17.v. of the FDD and Section 9.8.A of the FA is modified to also provide,
"Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise."
Item 5 of the FDD and Section 4.1 of the FA are modified with the addition of the following language,
"Based upon the franchisor's financial 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 and the outlet is opened."
The Franchisee Agreement is amended to provide,
"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 53–150)
What This Means (2025 FDD)
According to the 2025 Cr3 American Exteriors FDD, specific sections of the Franchise Agreement are modified by state-specific addenda. These modifications primarily address legal compliance and franchisee rights within certain states. For instance, for Maryland franchisees, Item 17.v of the FDD and Section 9.8.A of the Franchise Agreement are modified to require that claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise. Also, Item 5 of the FDD and Section 4.1 of the FA are modified to defer initial fees and payments until Cr3 American Exteriors completes its pre-opening obligations and the outlet is opened due to a financial assurance required by the Maryland Securities Commissioner. Furthermore, the Franchise Agreement is amended to ensure that no representations require a release, estoppel, or waiver of liability under the Maryland Franchise Registration and Disclosure Law. These modifications are detailed in Exhibit A, which must be executed simultaneously with the Franchise Agreement.
For California franchisees, the FDD notes that several provisions within the Franchise Agreement may not be enforceable under California law. These include provisions related to termination upon bankruptcy and covenants not to compete extending beyond the termination of the agreement. Additionally, California law requires Cr3 American Exteriors to provide a disclosure document before asking a franchisee to agree to a material modification of an existing franchise. The FDD also states that a shortened statute of limitations period in the Franchise Agreement is void to the extent it conflicts with California Corporations Code Sections 31303 and 31304. Moreover, any requirement to sign a general release upon renewal or transfer of the franchise is subject to California Corporation Code 31512, which voids waivers of rights under the Franchise Investment Law.
These state-specific addenda highlight the importance of franchisees understanding the legal landscape in their particular state and how it interacts with the standard Cr3 American Exteriors Franchise Agreement. Prospective franchisees should carefully review Exhibit A and consult with legal counsel to fully understand their rights and obligations. The modifications ensure that the franchise agreement complies with local laws, providing additional protections and clarifying certain terms to align with state regulations.