What item of the Ledgers FDD is modified regarding dispute resolution through arbitration?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Item 17.u. of the FDD and Section 9.2E of the FA is modified to also provide,
- "This Franchise Agreement provides that disputes are resolved through arbitration. 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. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable."
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, Item 17 of the FDD, which typically covers dispute resolution, is modified in Maryland. Specifically, Item 17.u. of the FDD and Section 9.2E of the Franchise Agreement are modified to include a statement regarding arbitration and the franchisee's right to file a lawsuit under Maryland Franchise Law. This modification acknowledges a potential conflict between the standard arbitration clause and Maryland law, which protects a franchisee's right to sue under state franchise law.
This modification is significant for prospective Ledgers franchisees in Maryland because it highlights a legal consideration regarding dispute resolution. While the Franchise Agreement generally mandates arbitration, Maryland law may allow franchisees to pursue lawsuits in certain cases, particularly those involving violations of Maryland franchise law. The FDD acknowledges that the enforceability of the forum selection requirement (arbitration) is subject to dispute due to the Federal Arbitration Act.
For a prospective franchisee, this means that while they may be required to engage in arbitration for most disputes, they might retain the right to file a lawsuit in Maryland for claims specifically related to violations of the Maryland Franchise Registration and Disclosure Law. This could provide an additional avenue for legal recourse in certain situations. It is important for franchisees to consult with legal counsel to understand their rights and options under both the Franchise Agreement and Maryland law.
Ledgers franchisees should be aware of the specific conditions and limitations outlined in the modified Item 17.u. and Section 9.2E, and seek legal advice to fully understand their rights and obligations regarding dispute resolution in Maryland. This ensures they are prepared to navigate potential disputes effectively and in accordance with applicable laws.