How is Section 9.1, Dispute Resolution, amended in the Stretch Zone Franchise Disclosure Document?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- Section 3.1 of the Area Development Agreement is amended as follows:
SECTION 3.1 DEVELOPMENT FEE
In addition, all Development Fees and initial payments by Developers shall be deferred until the first Franchise under the Area Development Agreement opens.
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- Section 5.2, TRANSFER BY YOU, is amended to provide that any Franchise Termination and Release Agreement does not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
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- Section 9.1, DISPUTE RESOLUTION, is amended to add the following paragraph:
A Franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. Any claims under the Maryland Franchise Registration and Disclosure Law may be brought in Maryland within 3 years after the grant of the franchise.
A Maryland franchise regulation states that it is an unfair or deceptive practice to require a Franchisee to waive its right to file a lawsuit in Maryland claiming a violation of the Maryland Franchise Law. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable.
- Section 9.11, ENTIRE AGREEMENT, is amended to add:
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 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, Section 9.1, regarding Dispute Resolution, is amended specifically for franchisees in Maryland. The amendment allows a franchisee to bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law. These claims must be brought within 3 years after the franchise is granted. This amendment is included in the Maryland Addendum to the franchise agreement.
This modification addresses a Maryland franchise regulation that considers it unfair or deceptive to require a franchisee to waive their right to file a lawsuit in Maryland for violations of Maryland franchise law. However, the document notes that the enforceability of this forum selection requirement is subject to dispute due to the Federal Arbitration Act.
Furthermore, the Stretch Zone Area Development Agreement is amended to clarify that representations requiring prospective franchisees to release liability do not act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law. This ensures that franchisees in Maryland retain their rights and protections under Maryland law, despite any general waivers or releases in the franchise agreement.