What state's laws govern franchise registration, employment, and covenants not to compete for Boulder Designs franchises 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' 2025 Franchise Disclosure Document, the laws of South Dakota govern franchise registration, employment, and covenants not to compete for franchises operating in that state. However, the agreement itself and all other provisions remain subject to the laws of Texas for application, construction, enforcement, and interpretation.
This means that while certain aspects of the franchise relationship, particularly those concerning registration, employment, and non-compete agreements, will be interpreted under South Dakota law, the overall contract and its general interpretation will still fall under Texas law. This dual governance could create complexities, as some legal issues might require navigating both Texas and South Dakota legal frameworks.
Prospective Boulder Designs franchisees in South Dakota should be aware of this dual legal framework and understand how it might affect their rights and obligations. It would be prudent to seek legal counsel to fully understand the implications of having different aspects of the franchise agreement governed by different state laws.