For Crave franchises, is the arbitration clause in the Franchise Agreement legally enforceable in Maryland, considering the state's franchise regulations and the Federal Arbitration Act?

According to Crave's 2025 Franchise Disclosure Document, there is some dispute as to whether the forum selection requirement in the Franchise Agreement is legally enforceable in Maryland, considering the Federal Arbitration Act. 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. This suggests that Maryland law aims to protect franchisees' rights to pursue legal action within the state.

To address this, Crave's FDD includes a Maryland state addendum to the franchise agreement. This addendum amends the franchise agreement to permit a franchisee to bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. It also specifies that any claims arising under this law must be brought within three years after the grant of the franchise. Furthermore, the general release required as a condition of renewal, sale, or transfer does not apply to any liability under the Maryland Franchise Registration and Disclosure Law.

Additionally, the Franchise Agreement and Franchisee Acknowledgment Statement are amended to include a statement clarifying that representations requiring franchisees to release, estop, or waive liability do not apply to liability incurred under the Maryland Franchise Registration and Disclosure Law. This comprehensive approach indicates that Crave is attempting to balance the standard arbitration clause with Maryland's franchise-specific regulations, although the ultimate enforceability may still be subject to legal interpretation and challenges.