In Maryland, does the Zoomin Groomin franchise agreement's arbitration clause supersede the franchisee's right to file a lawsuit claiming a violation of the Maryland Franchise Law?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
As to franchises governed by the Maryland Franchise Registration and Disclosure Law, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
- Item 17.b. is modified to also provide, "The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
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- Item 17.u. is modified to also provide, "This franchise agreement provides that disputes are resolved through arbitration. 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."
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- Item 17.v. is modified to also provide, "Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 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.
Source: Item 17 — g. of the Disclosure Document is modified to state that, in addition to the grounds for immediate termination specified in Item 17.h., the franchisor can terminate upon written notice and a 60 day opportunity to cure for a breach of the Franchise Agreement. (FDD pages 51–65)
What This Means (2025 FDD)
According to Zoomin Groomin's 2025 Franchise Disclosure Document, the franchise agreement contains an arbitration clause. However, a Maryland franchise regulation considers it an unfair or deceptive practice to require a franchisee to waive their right to file a lawsuit in Maryland claiming a violation of the Maryland Franchise Law. The FDD acknowledges that there is some dispute as to whether this forum selection requirement is legally enforceable, especially considering the Federal Arbitration Act.
For a prospective Zoomin Groomin franchisee in Maryland, this means that while the franchise agreement may stipulate that disputes are resolved through arbitration, the enforceability of this clause regarding violations of Maryland Franchise Law is uncertain. The FDD indicates that Maryland law aims to protect franchisees' rights to pursue lawsuits for violations of franchise law, despite the presence of an arbitration clause in the agreement.
It is important for potential franchisees to be aware of this conflict and to seek legal counsel to understand their rights fully. The FDD also specifies that any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise. Furthermore, no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by the franchisor.