Is it considered unfair by the North Dakota Securities Commissioner for Bambu franchise agreements to specify that they are governed by laws of a state other than North Dakota?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
The North Dakota Securities Commissioner has held the following to be unfair, unjust or inequitable to North Dakota franchisees:
- A. Restrictive Covenants: Franchise Disclosure Documents which disclose the existence of covenants restricting competition contrary to Section 9-08-06, N.D.C.C., without further disclosing that such covenants will be subject to this statute.
- B. Situs of Arbitration Proceedings: Franchise agreements providing that the parties must agree to the arbitration of disputes at a location that is remote from the site of the franchisee's business.
- C. Restrictions on Forum: Requiring North Dakota franchisees to consent to the jurisdiction of courts outside of North Dakota.
- D. Liquidated Damages and Termination Penalties: Requiring North Dakota franchisees to consent to liquidated damages or termination penalties.
- E. Applicable Laws: Franchise agreements which specify that they are to be governed by the laws of a state other than North Dakota.
- F. Waiver of Trial by Jury: Requiring North Dakota franchisees to consent to the waiver of a trial by jury.
- G. Waiver of Exemplary & Punitive Damages: Requiring North Dakota franchisees to consent to a waiver of exemplary and punitive damages.
- H. General Release: Franchise agreements that require the franchisee to sign a general release upon renewal of the franchise agreement.
- I. Limitation of Claims: Franchise agreements that require the franchisee to consent to a limitation of claims. The statute of limitations under North Dakota law applies.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the North Dakota Securities Commissioner considers it unfair, unjust, or inequitable for Bambu franchise agreements to specify that they are governed by the laws of a state other than North Dakota. This is detailed in the North Dakota Rider to the Franchise Agreement.
This means that if a Bambu franchisee is located in North Dakota, the franchise agreement should be governed by North Dakota law, not the laws of another state. This provision aims to protect North Dakota franchisees by ensuring that local laws and regulations are applied to their franchise agreements, providing them with legal recourse within their own state.
Prospective franchisees in North Dakota should be aware of this rider and ensure that their franchise agreement complies with it. This protection helps to level the playing field, preventing potential disadvantages that could arise if the agreement were governed by laws outside of North Dakota. It is important for franchisees to consult with a legal professional to ensure full compliance and understanding of their rights under North Dakota law.