Under the Pearce Bespoke Franchise Agreement, can a requirement for a franchisee to prospectively assent to a release relieve a person from liability under the Acts?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 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.
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- 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.)."
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 has specific stipulations regarding liability releases. The document states that the Maryland law prohibits Pearce Bespoke from requiring a franchisee to agree to a release of liability under that law as a condition for the sale, renewal, assignment, or transfer of the franchise.
This means that Pearce Bespoke cannot force a franchisee in Maryland to sign away their rights to hold the company liable for certain actions as a prerequisite for entering into, continuing, or transferring the franchise agreement. This protection is in place to ensure that franchisees are not unfairly disadvantaged and can seek legal recourse if Pearce Bespoke violates the law.
The FDD further clarifies that any inconsistencies with the Maryland Franchise Registration and Disclosure Law within the Area Development Agreement are considered deleted. This ensures that the state law takes precedence over any conflicting terms in the agreement, providing franchisees in Maryland with the full protection of the law. This also applies to the clause regarding termination upon bankruptcy, which may not be enforceable under federal bankruptcy law.