factual

How does the Maryland amendment affect inconsistent provisions in the Pearce Bespoke Area Development Agreement regarding liability releases?

Pearce_Bespoke Franchise · 2025 FDD

Answer from 2025 FDD Document

The Maryland Franchise Registration and Disclosure Law prohibits a franchisor from requiring a franchisee's assent to a release of liability under that Law as a condition for the sale, renewal, assignment or transfer of the franchise. To the extent of any inconsistencies with the Maryland Franchise Registration and Disclosure Law contained in the Area Development Agreement such inconsistent provisions are hereby deleted.

    1. To the extent of any inconsistencies, Area Development Agreement is hereby amended to further state:
    • "Our right to terminate you upon your bankruptcy, however, may not be enforceable under federal bankruptcy law (11 U.S.C. §101 et. seq.)."
    1. To the extent of any inconsistencies, the Area Development Agreement is hereby amended to further state:
    • "Nothing herein shall waive your right to file a lawsuit alleging a cause of action arising under the Maryland Franchise Law in any court of competent jurisdiction in the State of Maryland."
    1. To the extent of any inconsistencies, the Area Development Agreement is hereby amended to further state:
    • "Any claims arising under the Maryland Franchise Law must be brought within three (3) years after the grant of the franchise."
    1. All representations requiring prospective franchisees to assent to a release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.
    1. Each provision of this Amendment shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law, Md. Code Ann., Bus. Reg. § 14-201 et seq., are met independently without reference to this Amendment.
    1. Section 2 of the Area Development Agreement is hereby amended to state that the Franchisor will defer collection of the Franchise Fee until the first franchise under the development agreement opens.
    1. To the extent of inconsistencies, the Area Development Agreement is hereby amended to state that all representations requiring prospective franchisees to assent to a release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.

Source: Item 22 — CONTRACTS (FDD page 39)

What This Means (2025 FDD)

According to the 2025 Pearce Bespoke Franchise Disclosure Document, the Maryland Franchise Registration and Disclosure Law prohibits Pearce Bespoke from requiring a franchisee's agreement to a release of liability under that law as a condition for the sale, renewal, assignment, or transfer of the franchise. To the extent that there are inconsistencies within the Area Development Agreement regarding this, those specific provisions are deleted.

Additionally, the Area Development Agreement is amended to explicitly state that any general release required as a condition of renewal, assignment, or transfer does not apply to liabilities under Maryland Franchise Law. The amendment also clarifies that a franchisee's right to file a lawsuit under Maryland Franchise Law in a competent Maryland court is not waived. Any claims arising under Maryland Franchise Law must be brought within three years after the franchise grant.

These amendments ensure that Pearce Bespoke franchisees in Maryland retain their rights and protections under Maryland Franchise Law, preventing the franchisor from circumventing these protections through standard contract clauses. This provides a more secure legal standing for franchisees operating in Maryland.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.