What section of the Ledgers Franchise Agreement 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 Ledgers' 2025 Franchise Disclosure Document, for franchises governed by the Maryland Franchise Registration and Disclosure Law, Item 17.u. of the FDD and Section 9.2E of the Franchise Agreement are modified. This modification pertains to dispute resolution through arbitration. Specifically, it adds a statement acknowledging that Maryland franchise regulations consider it an unfair or deceptive practice to require a franchisee to waive their right to file a lawsuit in Maryland for violations of Maryland Franchise Law. However, the disclosure also notes that the enforceability of this forum selection requirement is under dispute due to the Federal Arbitration Act.
This modification is significant for prospective Ledgers franchisees in Maryland as it highlights a potential conflict between the standard franchise agreement's arbitration clause and Maryland state law. While the agreement generally mandates arbitration for dispute resolution, Maryland law seeks to protect franchisees' rights to pursue lawsuits within the state for violations of franchise law. The FDD acknowledges the uncertainty surrounding the enforceability of the arbitration clause in Maryland, suggesting that a franchisee's ability to litigate disputes in Maryland courts may depend on how these conflicting provisions are interpreted and applied.
For a prospective franchisee, this means understanding that the standard arbitration clause in the Ledgers Franchise Agreement may not be fully enforceable in Maryland. It is advisable to seek legal counsel to fully understand their rights and options regarding dispute resolution. This includes assessing the potential benefits and drawbacks of arbitration versus litigation, and understanding the circumstances under which a Maryland court might allow a franchisee to pursue a lawsuit despite the arbitration clause. This modification aims to inform franchisees of their rights under Maryland law and the potential challenges to enforcing mandatory arbitration clauses.