What sections of the 7 Brew Franchise Agreement are modified by the release language in the Rider?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
RELEASES. The following language is added at the end of Sections 4.A, 16.A, 16.C(2)(i), 16.G, 17, and 19.F(3) of the Franchise Agreement:
Any release executed will not apply to the extent otherwise prohibited by applicable law with respect to claims arising under the North Dakota Franchise Investment Law. 3. COVENANT NOT TO COMPETE. Section 19.E of the Franchise Agreement is amended by adding the following: Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota. However, you acknowledge and agree
that we intend to seek enforcement of these provisions to the extent allowed under the law. 4. ARBITRATION. The third sentence of Section 21.F of the Franchise Agreement is amended to read as follows: All proceedings, including the hearing, will be conducted at a suitable location that is within ten (10) miles of where we have our (or, in the case of a transfer by us,
the then-current franchisor has its) principal business address when the arbitration demand is filed, provided, however, that to the extent required by the North Dakota Franchise Investment Law (unless such a requirement is preempted by the Federal Arbitration Act), arbitration proceedings will be held at a site to which we and you agree.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to the 2025 7 Brew Franchise Disclosure Document, for franchisees who are residents of North Dakota or conduct franchise-related activities there, a rider modifies specific sections of the Franchise Agreement regarding releases, covenants not to compete, and arbitration. The release language added to the end of Sections 4.A, 16.A, 16.C(2)(i), 16.G, 17, and 19.F(3) of the Franchise Agreement will not apply to the extent prohibited by applicable law concerning claims arising under the North Dakota Franchise Investment Law. This ensures that any releases executed by the franchisee do not waive rights protected by North Dakota franchise law.
Section 19.E of the Franchise Agreement, concerning covenants not to compete, is also amended for North Dakota franchisees. While such covenants are generally considered unenforceable in North Dakota, 7 Brew states its intent to seek enforcement of these provisions to the extent allowed by law. This indicates that 7 Brew may still attempt to enforce non-compete clauses, even if their enforceability is questionable under North Dakota law.
Additionally, the third sentence of Section 21.F of the Franchise Agreement, which addresses arbitration, is modified. Typically, arbitration proceedings are held within ten miles of 7 Brew's principal business address. However, the amendment specifies that if required by the North Dakota Franchise Investment Law (unless preempted by the Federal Arbitration Act), arbitration proceedings will be held at a site agreed upon by both 7 Brew and the franchisee. This change ensures compliance with North Dakota law regarding the location of arbitration proceedings, potentially requiring 7 Brew to arbitrate disputes in a location more convenient for the franchisee.