Maryland Franchisor Bond Guide
If you’ve been told you need a surety bond to sell your franchise in Maryland, you’re in the right place. This guide outlines the full bonding process and requirements.
Bond Overview
- Purpose: To protect potential buyers from insolvent or noncompliant franchisors
- Who Needs It: Franchisors without adequate financials as determined by the state
- Regulating Body: The State of Maryland Securities Division
- Required Coverage: $1,000–$500,000
- Premium Rate: Credit-based, typically 1–10%
What Is a Maryland Franchisor Bond?
A Maryland franchisor bond is a type of surety bond that guarantees a franchisor will uphold laws and contract agreements.
If the Securities Division determines that a franchisor does not have adequate financials to meet its obligations to franchisees, the Commissioner will require a surety bond. This financial security protects current and potential franchisees from harm.
How Much Do Franchisor Bonds Cost in Maryland?
Maryland franchisor bonds cost a small percentage of the total coverage amount, typically 0.5–10%. The required bond amount will vary based on the value of the franchise.
Enter your bond amount and information to receive a free quote within one business day.
SuretyBonds.com offers the lowest available rates from our nationwide provider network with no added fees.
How Does a Franchise Bond Work?
A Maryland franchisor surety bond creates a legal contract between these three parties:
- Principal: The franchisor filing the bond
- Obligee: The State of Maryland Securities Division requiring the bond
- Surety: The provider issuing the bond
These bonds hold franchisors liable for upholding §14-217 of the Maryland Franchise Law. Otherwise, harmed parties can file claims on the bond to receive reimbursement from the surety.
The surety will pay valid claims then seek repayment from you, the franchisor.
How Do I Get a Franchisor Bond in Maryland?
With SuretyBonds.com, you can get your franchise bond by following these simple steps:
- Verify the bond amount you need
- Submit a quick online application
- Receive your free quote
- Purchase your bond online
We’ll email you the bond shortly after purchase. Remember to file it with the Securities Division to become officially bonded.
Can I Get Bonded With Bad Credit?
Yes, you can typically still get a franchisor bond with bad credit. However, keep in mind that credit score does impact premium rates. Apply to see if you qualify today.
How Do I Renew My Franchisor Bond?
These bonds expire annually. To renew for another term, simply pay your renewal premium before the expiration date.
