For Ledgers franchises in Maryland, what is the potential conflict between the franchise agreement's arbitration clause and Maryland franchise regulations?

According to Ledgers' 2025 Franchise Disclosure Document, there is a potential conflict between the franchise agreement's arbitration clause and Maryland franchise regulations. The FDD states that the franchise agreement requires disputes to be resolved through arbitration. However, Maryland franchise regulations stipulate that it is an unfair or deceptive practice to require a franchisee to waive their right to file a lawsuit in Maryland claiming a violation of the Maryland Franchise Law.

The FDD acknowledges that there is some dispute as to whether the forum selection requirement (arbitration) is legally enforceable, especially in light of the Federal Arbitration Act. This means that a Ledgers franchisee in Maryland might be compelled to arbitrate disputes, but Maryland law seeks to protect their right to sue in Maryland courts for violations of franchise law.

For a prospective Ledgers franchisee in Maryland, this creates uncertainty. While the franchise agreement mandates arbitration, the franchisee may have a legal basis to challenge this requirement and pursue a lawsuit in Maryland if they believe the franchisor has violated Maryland franchise law. It is advisable for prospective franchisees to seek legal counsel to understand their rights and options under both the franchise agreement and Maryland law.