In Maryland, what is the effect of the addendum on the original Spray Net Franchise Agreement?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
SPRAY-NET INC. MARYLAND ADDENDUM TO THE FRANCHISE AGREEMENT
Under COMAR 02-02-08-16L, the general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Law.
Any provision of the Agreement which provides for a period of limitations for causes of action shall not apply to causes of action under the Maryland Franchise Law, Business Regulation Article, §14-227, Annotated Code of Maryland. Franchisee must bring an action under such law within three years after the grant of the franchise.
Notwithstanding any provision of the Agreement to the contrary, Franchisee does not waive its 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.
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.
The undersigned hereby acknowledge and agree that this addendum is hereby made part of and incorporated into the foregoing Franchise Agreement.
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.
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. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the multi-unit development agreement opens.
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 modifies the original franchise agreement in several key ways to comply with Maryland franchise law. Specifically, any statement or acknowledgment signed by the franchisee cannot waive claims under state franchise law, including fraud, or disclaim reliance on statements made by Spray Net. This addendum supersedes any conflicting terms in the franchise agreement.
Additionally, due to Spray Net's financial condition, the Maryland Securities Commissioner requires financial assurance. As a result, all initial fees and payments from franchisees, as well as development fees and initial payments from area developers, are deferred until Spray Net completes its pre-opening obligations or the first franchise opens under a multi-unit development agreement.
Furthermore, the general release required for renewal, sale, or transfer of the franchise does not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. Franchisees have three years after the franchise grant to bring an action under this law and can file lawsuits in Maryland courts regarding causes of action arising from the Maryland Franchise Law. The addendum also clarifies that the franchise agreement's termination provision upon franchisee bankruptcy may not be enforceable under federal bankruptcy law. These modifications provide additional protections and rights to Spray Net franchisees operating in Maryland.