For Aira Fitness franchises in North Dakota, is Section 13.C of the Franchise Agreement regarding Governing Law/Consent to Jurisdiction still applicable?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
"Covenants not to compete such as those mentioned above are generally unenforceable in the State of North Dakota."
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- Section 13.A. of the Franchise Agreement on "Arbitration; Mediation" is revised as follows:
- "Arbitration shall take place in the Chicago metropolitan area at a location agreeable to all parties."
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- Section 13.C. of the Franchise Agreement on "Governing Law/Consent to Jurisdiction" is deleted in its entirety.
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- Section 13.E. of the Franchise Agreement on "Waiver of Jury Trial" is deleted in its entirety.
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- Section 13F. of the Franchise Agreement on "Waiver of Punitive Damages" is deleted in its entirety.
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- Section 14.E. of the Franchise Agreement on "Liquidated Damages" is deleted in its entirety.
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- No statement, questionnaire, or acknowledgement 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 behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- The North Dakota Securities Department requires the Franchisor or affiliates to defer all initial franchise fees until such time as the Franchisor or affiliates have completed all initial obligations owed to the Franchisee under the Franchise Agreement and the Franchisee has commenced doing business. This deferral of the initial franchise fee is required based on the Franchisor's financial condition.
Source: Item 17 — **RENEWAL, TERMINATION,TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 48–54)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, Section 13.C of the Franchise Agreement, which pertains to Governing Law/Consent to Jurisdiction, is not applicable for franchises operating in North Dakota. An addendum specific to North Dakota states that this section is deleted in its entirety. This means that the standard provisions regarding which state's laws govern the agreement and where legal disputes must be resolved do not apply to Aira Fitness franchisees in North Dakota.
This deletion has significant implications for prospective Aira Fitness franchisees in North Dakota. Typically, franchise agreements specify a particular jurisdiction (often the state where the franchisor is headquartered) for legal proceedings, which can be inconvenient and costly for franchisees located elsewhere. By removing this clause, Aira Fitness franchisees in North Dakota may have the opportunity to resolve disputes in a more local and convenient forum. It is important to note that this does not necessarily mean disputes will be resolved in North Dakota; other factors, such as federal law or the location of the franchisee's business, could still influence jurisdiction.
Furthermore, the addendum indicates that Section 13.A of the Franchise Agreement on "Arbitration; Mediation" is revised to state that arbitration shall take place in the Chicago metropolitan area, at a location agreeable to all parties. This revision, along with the deletion of sections 13.C, 13.E (Waiver of Jury Trial), 13.F (Waiver of Punitive Damages) and 14.E (Liquidated Damages), suggests a tailored approach to dispute resolution for Aira Fitness franchisees in North Dakota, potentially offering more protection and flexibility compared to the standard agreement. Prospective franchisees should carefully review the implications of these changes with a legal professional to fully understand their rights and obligations.
Additionally, the North Dakota Securities Department mandates that Aira Fitness defer all initial franchise fees until the franchisor has fulfilled all initial obligations to the franchisee and the franchisee has commenced business operations. This requirement is based on the franchisor's financial condition, providing an added layer of financial security for new Aira Fitness franchisees in North Dakota. This deferral ensures that franchisees do not pay the initial franchise fee until Aira Fitness has met its initial obligations, reducing the risk for the franchisee.