Does the Bambu franchise agreement require North Dakota franchisees to arbitrate disputes at a location remote from their business site?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
NORTH DAKOTA RIDER TO FRANCHISE AGREEMENT
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- 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 Rider to the Franchise Agreement addresses concerns raised by the North Dakota Securities Commissioner regarding fairness to franchisees. Specifically, it acknowledges that franchise agreements requiring arbitration of disputes at a location remote from the franchisee's business site are considered unfair, unjust, or inequitable to North Dakota franchisees. This indicates that the standard Bambu franchise agreement might contain such a clause, but the addendum seeks to address this issue for franchisees in North Dakota.
This addendum means that while the original franchise agreement might stipulate arbitration in a distant location, this provision is likely unenforceable for Bambu franchisees in North Dakota. The state's securities commissioner has identified such clauses as potentially harmful to franchisees, suggesting they could create undue burden or cost for franchisees to resolve disputes. Therefore, Bambu appears to acknowledge the need to comply with North Dakota's specific regulations regarding arbitration locations.
Prospective Bambu franchisees in North Dakota should carefully review the franchise agreement and the North Dakota Rider to fully understand their rights regarding dispute resolution. They should also seek legal counsel to ensure that the arbitration provisions are fair and compliant with North Dakota law. While Bambu states that they intend to fully enforce all provisions of the agreement, the North Dakota Rider takes precedence on the specific points it addresses.