Does the Boulder Designs Promissory Note specify which state's laws govern the agreement?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
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;
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the Franchise Agreement specifies that Texas law governs the agreement. Specifically, Section 23.1 of the Franchise Agreement states that Texas law governs the Franchise Agreement.
However, the FDD also notes an exception for franchisees in North Dakota. The Securities Commissioner of the State of North Dakota has determined that franchise agreements specifying governance by laws outside of North Dakota are considered unfair, unjust, or inequitable under North Dakota Franchise Investment Law. Therefore, for Boulder Designs franchisees in North Dakota, this provision is void and has no effect.
Prospective franchisees should be aware of which state laws govern their agreements, as this can significantly impact their rights and obligations. Franchisees operating outside of Texas should consult with legal counsel to understand how the governing law provision may affect them, especially considering the North Dakota exception.