In North Dakota, can a Belocal Franchise Agreement require the franchisee to consent to termination penalties or liquidated damages?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. The State of North Dakota has determined that the following types of provisions are deemed to be contrary to North Dakota Law:
- (a) A provision requiring a North Dakota franchisee to sign a general release upon renewal of the Franchise Agreement;
- (b) A provision requiring a North Dakota franchisee to consent to termination penalties or liquidated damages;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if you are a franchisee in North Dakota, the Franchise Agreement cannot require you to consent to termination penalties or liquidated damages. The FDD includes an amendment specifically for North Dakota, stating that the state has determined such provisions to be contrary to North Dakota law.
The amendment explicitly deletes any provisions in the Franchise Agreement that violate this determination. This means that Belocal franchisees in North Dakota are protected from being forced to agree to financial penalties upon termination of the agreement or any clauses requiring liquidated damages.
This protection is important for prospective franchisees as it ensures that they will not be subject to potentially unfair or excessive financial burdens if the franchise agreement is terminated. It also provides a more level playing field, as franchisees are not forced to consent to terms that are deemed unlawful by the state of North Dakota.