Under what conditions are the additional disclosures in the Pump It Up FDD effective?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
E, OR BE EXEMPT FROM REGISTRATION: CALIFORNIA, HAWAII, ILLINOIS, INDIANA, MARYLAND, MICHIGAN, MINNESOTA, NEW YORK, NORTH DAKOTA, RHODE ISLAND, SOUTH DAKOTA, VIRGINIA, WASHINGTON AND WISCONSIN.
THIS DOCUMENT IS EFFECTIVE AND MAY BE USED IN THE FOLLOWING STATES, WHERE THE DOCUMENT IS FILED, REGISTERED OR EXEMPT FROM REGISTRATION, AS OF THE EFFECTIVE DATE STATED BELOW:
| State | Effective Date |
|---|---|
| California | IN PROGRESS |
| Illinois | IN PROGRESS |
| Maryland | IN PROGRESS |
| Michigan | IN PROGRESS |
| Minnesota | IN PROGRESS |
| New York | IN PROGRESS |
| Virginia | IN PROGRESS |
| Washington | IN PROGRESS |
| Wisconsin | IN PROGRESS |
OTHER STATES MAY REQUIRE REGISTRATION, FILING OR EXEMPTION OF A FRANCHISE UNDER OTHER LAWS, SUCH AS THOSE THAT REGULATE THE OFFER AND SALE OF BUSINESS OPPORTUNITIES OR SELLER-ASSISTED MARKETING PLANS.
Exhibit H Additional Disclosures Required by Certain States/ Addenda Required by Certain States Pump It Up Franchise Disclosure Document
ADDITIONAL DISCLOSURES REQUIRED BY THE STATE OF CALIFORNIA
The registration of this franchise offering by the California Department of Financial Protection and Innovation does not constitute approval, recommendation, or endorsement by the Commissioner.
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- The California Franchise Investment Law requires that a copy of all proposed agreements relating to the sale of the Franchise be delivered together with the FDD 14 days prior to execution of any agreement.
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- California Corporations Code Section 31125 requires us to give to you a FDD approved by the California Department of Financial Protection and Innovation before we ask you to consider a material modification of your Franchise Agreement.
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- The Franchise Agreement contains provisions requiring litigation, with the costs being awarded to the prevailing party. The litigation will occur in Franchisor's then existing principal business location. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of the Franchise Agreement restricting venue to a forum outside the State of California.
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- The Franchise Agreement requires the application of the law of Arizona. This provision may not be enforceable under California law.
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- Neither Franchisor nor any other person listed in Item 2 of the FDD is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.
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- The following statement is added to Item 5:
a) "The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business."
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- Item 6 of the FDD is amended to state the highest interest rate allowed by law in California is 10% annually.
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- California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination, transfer, or non-renewal of a franchise. The Franchise Agreement contains a provision that is inconsistent with the California Franchise Investment Law and the California Franchise Investment Law will control.
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- The Franchise Agreement provides for termination upon bankruptcy. Such a provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. SEC. 101 et seq.).
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- The Franchise Agreement contains a covenant not to compete provision which extends beyond the termination of the Franchise. Such provisions may not be enforceable under California law.
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- You must sign a general release of claims if you renew or transfer your Franchise. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).
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- Our website has not been reviewed or approved by the California Department of Financial Protection and Innovation. Any complaints concerning the content of this website may be directed to the California Department of Financial Protection and Innovation at www.dfpi.ca.gov.
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- Any provision of a franchise agreement, franchise disclosure document, acknowledgement, questionnaire, or other writing, including any exhibit thereto, disclaiming or denying any of the following shall be deemed contrary to public policy and shall be void and unenforceable:
a) Representations made by the franchisor or its personnel or agents to a prospective franchisee.
b) Reliance by a franchisee on any representations made by the franchisor or its personnel or agents.
c) Reliance by a franchisee on the franchise disclosure document, including any exhibit thereto.
- d) Violations of any provision of this division.
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- Franchisees must sign a personal guaranty, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guaranty will place your and your spouse's marital and personal assets at risk, perhaps including your house, if your franchise fails.
ADDITIONAL DISCLOSURES REQUIRED BY THE STATE OF ILLINOIS
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- Illinois law governs the agreements.
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- In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal are set forth in Sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- We reserve the right to require You to pay up to $25,000 for an opening advertising and marketing campaign for Your first Shop and each subsequent Shop that You establish.
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- In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
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- No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on behalf of the Franchisor, franchise seller or other person acting on behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
ADDITIONAL DISCLOSURES REQUIRED BY THE STATE OF MARYLAND
The following provisions apply to all Franchises offered and sold to residents of the State of Maryland or to be located in the State of Maryland:
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- Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement and the outlet is opened.
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- The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. §§ 101 et seq.).
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- Pursuant to Maryland law, the general release required as a condition of renewal and/or assignment/transfer shall not apply to any claims that may arise under the Maryland Franchise Registration and Disclosure Law.
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- You may bring any cause of action against us in any court of competent jurisdiction, including the state or federal courts of Maryland. Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise.
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- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- Each provision of these Additional Disclosures shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law are met independently without reference to these Additional Disclosures. The Additional Disclosures shall have no force or effect if such jurisdictional requirements are not met.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to the 2025 Pump It Up Franchise Disclosure Document, the additional disclosures are required by certain states and are effective under specific conditions, primarily based on the franchisee's location. For instance, there are specific addenda to the Pump It Up General Release required for Washington franchisees, addenda to the Pump It Up Franchise Agreement required for Wisconsin franchisees, and additional disclosures required by states like Virginia, Washington, Minnesota, Maryland and California. These additional disclosures and addenda modify the standard franchise agreement to comply with state-specific franchise laws.
For Washington franchisees, the addendum to the General Release ensures that the release does not apply to claims arising under the Washington Franchise Investment Protection Act. Similarly, for Wisconsin franchisees, an addendum to the Franchise Agreement adds a paragraph to Sections 4.C and 19, noting that the Wisconsin Fair Dealership Law may affect the conditions under which the agreement can be terminated or not renewed. These addenda are entered into simultaneously with the execution of the original agreements and remain in effect unless expressly modified by the addenda.
In states like Virginia and Washington, the additional disclosures address specific legal protections for franchisees. In Virginia, the FDD is amended to recognize restrictions under the Virginia Retail Franchising Act, ensuring that franchise cancellations are only for reasonable cause. In Washington, the disclosures clarify that the Washington Franchise Investment Protection Act prevails in case of conflict of laws and that franchisees may bring actions in Washington for violations of the Act. These state-specific disclosures aim to protect franchisees' rights and ensure compliance with local laws.
For franchisees, it is crucial to review these state-specific disclosures carefully, as they can significantly impact their rights and obligations under the franchise agreement. The additional disclosures modify the standard agreement to align with local laws, providing franchisees with specific protections and remedies that may not be available under the general franchise agreement. Prospective franchisees should consult with legal counsel to fully understand the implications of these state-specific provisions and how they affect their investment.