According to North Dakota law, what is the status of covenants restricting competition within the 1-800-GOT-JUNK? Franchise Agreement?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that those covenants may be subject to the statute, have been determined to be unfair, unjust, or inequitable in North Dakota.
Sections of the Disclosure Document and Franchise Agreement containing covenants restricting competition to which you must agree may not be enforceable under North Dakota law, and are amended accordingly to the minimum extent required by law.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, covenants that restrict competition may not be enforceable in North Dakota. Specifically, the FDD states that covenants restricting competition that do not disclose that they are subject to Section 9-08-06 of the North Dakota Century Code have been determined to be unfair, unjust, or inequitable in North Dakota.
This means that the sections of the 1-800-GOT-JUNK? Disclosure Document and Franchise Agreement that contain covenants restricting competition, which a franchisee must agree to, may not be enforceable under North Dakota law. As a result, these sections are amended to the minimum extent required by law.
For a prospective 1-800-GOT-JUNK? franchisee in North Dakota, this addendum provides some protection against overly broad or unfair non-compete clauses. It ensures that these clauses are subject to state law and judicial review, and that the franchisee does not unknowingly waive their rights. Franchisees should carefully review the North Dakota addendum and understand how it modifies the standard franchise agreement, especially regarding competition restrictions.