What New York laws are recognized in the Boulder Designs Disclosure document?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the North Dakota Franchise Investment Law, N.D. Cent. Code 51- 1901 through 51-19-17, and the policies of the Office of the State of North Dakota Securities Commission, the Disclosure document for Boulder Designs Franchising, LLC for use in the State of North Dakota shall be amended as follows:
Sections 2.5, and 17.2 and Exhibit 2 of the Franchise Agreement disclose the existence of certain covenants restricting competition to which the Franchisee must agree.
The Securities Commissioner of the State of North Dakota has held that covenants restricting competition, contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statute, are unfair, unjust, or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law.
Covenants not to compete such as those referenced above are generally considered unenforceable in the State of North Dakota;
Section 3.1 of the Franchise Agreement is amended to reflect that payment of Franchise Fee will be deferred until Franchisor has met its initial obligations to Franchisee, and Franchisee has commenced doing business.
Section 23.1, of the Franchise Agreement provide that Texas law governs the Franchise Agreement.
The Securities Commissioner of the State of North Dakota has held that Franchise Agreements which specify that they are to be governed by the laws of a state other than North Dakota are unfair, unjust or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law, therefore, this provision is void and of no effect in the State of North Dakota;
Sections 23.2 and 23.7 of the Franchise Agreement provides that Franchisees must consent to the jurisdiction of the McLennan County, Texas.
The Securities Commissioner of the State of North Dakota has held that requiring Franchisees to consent to jurisdiction of courts outside of North Dakota is unfair, unjust or inequitable within the intent of Section 51-19-09 of the North Dakota Investment Law.
The site of mediation or arbitration shall be agreeable to all parties; therefore, this provision is amended to provide that the state of mediation or arbitration shall be agreeable to all parties;
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
Based on the 2025 Boulder Designs Franchise Disclosure Document excerpts, there is no mention of New York state laws. The document includes amendments specific to the franchise laws of North Dakota. These amendments address concerns raised by the North Dakota Securities Commissioner regarding covenants restricting competition, payment of the franchise fee, choice of law, and consent to jurisdiction.
Specifically, the North Dakota amendments address the enforceability of non-compete agreements under Section 9-08-06 of the North Dakota Century Code, the deferral of franchise fee payments until the franchisor fulfills its obligations, and the stipulation that Texas law governs the Franchise Agreement. The amendments also address the requirement for franchisees to consent to the jurisdiction of McLennan County, Texas, ensuring that mediation or arbitration sites are agreeable to all parties.
For a prospective Boulder Designs franchisee in New York, it is important to note that the FDD does not contain state-specific amendments for New York. Therefore, a potential franchisee should consult with a legal professional to ensure full compliance with New York franchise laws and regulations before signing the agreement. It would be prudent to ask the franchisor directly about any specific considerations or modifications relevant to franchising in New York.