How enforceable are non-competition covenants after termination or expiration of a Bft franchise in North Dakota?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following is added to the end of the "Summary" section of Item 17.r, entitled Noncompetition covenants after the franchise is terminated or expires:
Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota; however, we and you will enforce the covenants to the maximum extent the law allows.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, non-competition covenants are generally considered unenforceable in North Dakota. However, Bft states that it will enforce these covenants to the maximum extent the law allows. This applies to the Franchise Agreement and the Multi-Unit Agreement.
For a prospective franchisee in North Dakota, this means that while non-compete agreements are disfavored, they may still be enforced to some degree. It is important to understand what specific activities are restricted, the geographic scope, and the duration of the non-compete clause. Even though North Dakota law generally frowns upon these covenants, a court might still uphold certain limited restrictions.
It is also important to note that several other clauses in Bft's standard agreements are modified by North Dakota law. These include provisions related to releases required for renewal or transfer, lost revenue damages, choice of law, mediation, arbitration, punitive damages, jury trial waivers, and class action waivers. These modifications reflect North Dakota's Franchise Investment Law, which aims to protect franchisees. Therefore, a franchisee should be aware of their rights under North Dakota law, as the standard franchise agreement is specifically amended to comply with those protections.