In Maryland, does the addendum to the Spray Net Franchise Agreement apply retroactively?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the Maryland addendum to the franchise agreement includes provisions that address the enforceability and interpretation of agreements signed by franchisees. Specifically, it states that no statement, questionnaire, or acknowledgment signed by a franchisee in connection with starting the franchise relationship can waive claims under state franchise law, including fraud, or disclaim reliance on statements made by Spray Net. This clause is designed to override any conflicting terms in other documents related to the franchise. This suggests that the addendum is intended to have a retroactive effect, ensuring that franchisees are protected from inadvertently waiving their rights through prior agreements.
This protection extends to certain liabilities under Maryland Franchise Law, as the general release typically required for renewal, sale, or transfer of the franchise does not apply to these liabilities. Franchisees have three years from the grant of the franchise to bring an action under this law, and they retain the right to file lawsuits in Maryland courts regarding causes of action arising from the Maryland Franchise Law, regardless of any conflicting provisions in the franchise agreement. These stipulations reinforce the retroactive nature of the addendum by clarifying that franchisees' rights under Maryland law are preserved, even if prior agreements might suggest otherwise.
Furthermore, the Maryland Securities Commissioner requires a financial assurance due to Spray Net's financial condition. As a result, all initial fees and payments owed by franchisees are deferred until Spray Net completes its pre-opening obligations. This deferral also applies to development fees and initial payments by area developers until the first franchise under the multi-unit development agreement opens. This financial protection measure, along with the other provisions, indicates that the addendum is designed to ensure franchisees are not disadvantaged by previous agreements or financial conditions, thus supporting its retroactive application to protect franchisees' rights from the outset of their relationship with Spray Net.