Does the Maryland franchise regulation allow a Cream franchisee to waive their right to file a lawsuit in Maryland claiming a violation of the Maryland Franchise Registration and Disclosure Law?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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Pursuant to COMAR 02.02.08.16L, any release required as a condition of renewal and/or assignment/transfer will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law.
- The following is added to the end of Section 14.A of the Agreement:
This provision might not be enforceable under federal bankruptcy law (11 U.S.C. Sections 101 et seq.).
- Section 17.F of the Agreement is supplemented by adding the following to the end of the Section:
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 Registration and Dis
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 Cream FDD, Maryland franchise regulations address the waiver of a franchisee's right to file a lawsuit. Specifically, Maryland law considers it an unfair or deceptive practice if Cream requires a franchisee to waive their right to file a lawsuit in Maryland for violations of the Maryland Franchise Registration and Disclosure Law. However, the FDD notes there may be some dispute as to whether this forum selection requirement is legally enforceable, considering the Federal Arbitration Act. This suggests that while Maryland law aims to protect franchisees' rights to sue within the state, the enforceability of this provision might be contested due to federal law.
For a prospective Cream franchisee in Maryland, this means that any clause in the franchise agreement that appears to force them to waive their right to sue Cream in Maryland courts over franchise law violations may not be enforceable. This protection is designed to ensure that franchisees can seek legal recourse within their state without being compelled to forfeit that right. However, the FDD's mention of potential conflicts with the Federal Arbitration Act introduces uncertainty.
Cream's FDD also states that a franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure law. Furthermore, any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.
In summary, while Maryland law seeks to prevent franchisees from waiving their right to sue Cream for violations of Maryland franchise law, the interplay with federal law could affect the actual enforcement of such protections. Franchisees should seek legal counsel to fully understand their rights and the implications of these provisions.