Are covenants not to compete enforceable for Annex Brands franchises in North Dakota?

According to Annex Brands' 2025 Franchise Disclosure Document, covenants not to compete may be unenforceable in North Dakota. Specifically, the FDD states that Sections 9.H, 13.C(6) and 16.D of the Franchise Agreement, and Attachment 11 to the Franchise Agreement, are amended to include the statement: "Covenants not to compete such as those referenced in this Section may be unenforceable in the State of North Dakota."

This amendment suggests that while Annex Brands includes non-compete clauses in its standard franchise agreement, these clauses might not be legally upheld in North Dakota. This could impact both the franchisor and franchisee. For Annex Brands, it means that enforcing non-compete agreements against former franchisees in North Dakota could be challenging. For a franchisee, this could provide more flexibility after leaving the franchise system, but it also means less protection from competition from former franchisees.

Prospective franchisees should consult with a legal professional to fully understand the implications of this clause and how it might affect their rights and obligations both during and after the franchise agreement term. It is important to note that the enforceability of such clauses can depend on specific circumstances and judicial interpretation, so legal advice is crucial.