Is Creative World School liable for any damages arising out of the operation of my Creative World School franchise?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
CREATIVE WORLD SCHOOLS FRANCHISING COMPANY, INC. YOU
ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT FOR CREATIVE WORLD SCHOOLS FRANCHISING COMPANY, INC. STATE OF MARYLAND
- The following is added to the disclosure document:
No statement, questionnaire or acknowledgement 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 behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- Sections (c) and (m) of Item 17 are amended by adding the following language:
The general release required as a condition of renewal, sale, and/or assignment or transfer will not apply to any liability under the Maryland Franchise and Disclosure Law (the "Maryland Law").
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- Item 17 is amended by adding the following language after the table:
- (a) The provision of the Franchise Agreement that provides for termination upon bankruptcy of the franchisee may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101, et seq.)
- (b) Any claims arising under the Maryland Law must be brought within 3 years after the grant of the franchise.
- (c) A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
RIDER TO CREATIVE WORLD SCHOOLS FRANCHISING COMPANY, INC. FRANCHISE AGREEMENT FOR USE IN MARYLAND
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
Based on the 2025 Creative World School Franchise Disclosure Document, the franchisor's liability for damages arising from the operation of a franchise is complex and depends on the specific circumstances and the state in which the franchise operates. For franchisees in Maryland and New York, certain provisions in the franchise agreement that might waive claims or disclaim reliance on the franchisor are superseded by state law. This means that Creative World School cannot enforce clauses that prevent franchisees from pursuing claims under applicable state franchise laws, including claims of fraud. These protections are specifically noted in addenda and riders to the franchise agreement for use in Maryland and New York, ensuring that franchisees in these states retain their legal rights.
However, the FDD also indicates that claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise. Similarly, for franchisees in Minnesota, the FDD states that nothing in the disclosure document or agreement can reduce any of the franchisee's rights as provided for in Minnesota statutes. This suggests that while Creative World School includes standard legal terms in its agreements, these terms are subject to state laws that may provide additional protections to franchisees.
For prospective franchisees, it is essential to understand the specific legal protections afforded to them by their state's franchise laws. The Creative World School FDD includes addenda and riders that modify the standard franchise agreement to comply with state-specific requirements. Franchisees should consult with legal counsel to fully understand their rights and obligations, and to assess the potential liabilities of both the franchisee and the franchisor under the franchise agreement and applicable state laws. This due diligence is crucial in evaluating the risks and benefits of investing in a Creative World School franchise.