For a Boulder Designs franchise, which state's law governs contractual and all other matters in South Dakota?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 23.1 of the Franchise Agreement is amended by the addition of the following language to the original language that appears therein: "The law regarding franchise registration, employment, covenants not to compete, and other matters of local concern will be governed by the laws of the State of South Dakota; but as to contractual and all other matters, this agreement and all provisions of this instrument will be and remain subject to the application, construction, enforcement, and interpretation under the governing law of Texas."
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, the laws of Texas govern contractual and all other matters for a Boulder Designs franchise in South Dakota. However, the laws of South Dakota will govern franchise registration, employment, covenants not to compete, and other matters of local concern.
This means that while the core franchise agreement is interpreted under Texas law, certain aspects specific to operating a business in South Dakota are subject to South Dakota law. This is a fairly common practice in franchising, where the franchise agreement itself is often governed by the laws of a particular state (typically the franchisor's home state), while local regulations and business laws are governed by the state in which the franchise is located.
For a prospective Boulder Designs franchisee in South Dakota, this means understanding both Texas and South Dakota laws. It would be prudent to consult with an attorney familiar with both states' laws to fully understand your rights and obligations. This dual governance aims to balance the need for a uniform franchise agreement with the importance of complying with local laws and regulations.