The Maryland Office of the Attorney General Securities Division recently issued a notice explaining how franchisors must address recent amendments to the Maryland Franchise Registration and Disclosure Law. The changes, enacted through H.B. 730 and signed by Gov. Wes Moore in May, take effect Oct. 1, 2026.
These are not merely administrative revisions. The amendments:
- Extend the state’s enforcement period,
- Change the deadline for certain franchisee civil actions,
- Expressly protect franchisee association rights, and
- Require franchisors to use Maryland-compliant offering documents when making offers or sales after the effective date.
Maryland’s changes reflect the continuing importance of state-specific franchise compliance; its neighbor, Virginia, also enacted new state-specific rules in 2026. Franchisors, franchisees, prospective franchisees, and multi-unit operators with Maryland locations or expansion plans should understand how the new rules may affect franchise sales, disclosure practices, contract language, and system operations.
A Longer Period for State Enforcement
The amendments extend the period during which the Maryland Securities Commissioner may exercise authority under the Maryland Franchise Law, including enforcement actions for violations.
Previously, the state generally had three years after a violation occurred. Beginning Oct. 1, 2026, the period becomes five years after the violation.
The added two years may have meaningful compliance implications. Issues involving franchise registration, disclosure, advertising, franchise sales practices, or agreement provisions do not always surface immediately. That may be particularly true in multi-unit development arrangements, where locations open on different schedules and the practical effects of particular disclosures or contractual obligations may not become apparent until later.
Franchisors should view the longer enforcement period as a reason to strengthen document retention and sales compliance practices. Important materials include all versions of the franchise disclosure document (FDD), signed receipts, state-specific addenda, franchise sales communications, financial performance documentation, and executed agreements. Franchisors should also confirm that their employees, brokers, franchise sales personnel, and development representatives understand Maryland-specific requirements rather than relying solely on a uniform national FDD or sales process.
For franchisees, the longer enforcement period may provide additional regulatory protection if a franchisor’s conduct potentially violates Maryland franchise law. It does not eliminate the need to preserve records or to seek legal advice promptly when concerns arise.
A New Deadline for Franchisee Claims
Maryland has also revised the time limit for franchisee private civil actions under the statute. Previously, an action generally had to be brought within three years after the franchise was granted.
Under the amended law, a franchisee must bring a qualifying claim by the earlier of:
- Four years after the franchise is granted; or
- Two years after the franchised business opens to the public.
The new framework does not always give a franchisee four years. In some circumstances, the two-year opening-based deadline will control.
The Securities Division states that FDDs, franchise agreements, area development agreements, and related Maryland addenda must conform to the amended law. If documents address the limitations period, the agency directs that they provide:
“Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought by the earlier of: (i) four (4) years after the franchise is granted; or (ii) two (2) years after the date the franchise opened to the public.”
Franchisors should review their FDD disclosure, applicable Item 17 provisions, franchise agreements, development agreements, and Maryland addenda for inconsistent language. Franchisees and prospective franchisees should likewise examine these terms before signing, especially in transactions involving future openings, multiple locations, or phased development.
Franchisee Association Rights
The amendments establish an important statutory protection for Maryland franchisees. For example, the updated law allows franchisees to join a trade association comprised of other franchisees in the same franchise system and participate in that association for any lawful purpose. It also prohibits franchisors, directly or indirectly through officers, agents, or employees, from restricting or inhibiting franchisees’ association rights or prohibiting lawful association among franchisees. The provision creates a private cause of action for violations.
For franchisees, the amendment provides clearer statutory support for communicating and organizing with fellow franchisees for lawful purposes. It does not permit disclosure of protected trade secrets or violations of otherwise valid contractual obligations. But franchisors cannot use contract provisions, policies, or management conduct to prevent Maryland franchisees from joining or participating in a lawful systemwide association.
Updated Materials Must Be Used October 1
The Securities Division’s notice includes a limited transition policy. A franchisor with an existing Maryland registration generally does not have to file an immediate post-effective amendment solely because the law changed. The Securities Division will review the revisions when the franchisor next renews its registration or otherwise files an amendment.
That filing accommodation does not permit franchisors to continue using outdated offering materials.
Beginning Oct. 1, 2026, a franchisor offering or selling franchises in Maryland must use an FDD and related agreements, or addenda, that have been revised to comply with the amendments. The Securities Division will not require an immediate filing or halt sales if the franchisor uses compliant materials in connection with Maryland offers and sales.
Franchisors should promptly audit their Maryland-specific materials, including the FDD Item 17 disclosures, franchise agreement, area development agreement, addenda, sales communications, and document-control procedures. Franchisees and prospective franchisees should review the revised Maryland addendum and related agreements carefully.
For multi-unit operators, the task may be more complex. Multiple agreements, separate franchise grants, staggered opening dates, and development deadlines can affect the deadline applicable to potential claims.
Consult with experienced franchise counsel to help:
- Franchisors maintain compliant offering practices and
- Franchisees understand the rights, obligations, and risks that may affect their investment.
Contact Lusthaus Law
Lusthaus Law’s website is a resource for New York franchisors and franchisees. We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends, legislative updates and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.
