onsideration that relates to the franchise relationship.

FOR THE STATE OF NORTH DAKOTA

• 1. The Securities Commissioner for the State of North Dakota has held that the provisions stated below in (a) through (h) are unfair, unjust, or inequitable to North Dakota Franchisees (Section 51- 19-09, N.D.C.C.) and may be unenforceable under North Dakota Law:
  • (a) A provision requiring a North Dakota franchisee to sign a general release upon renewal of the Franchise Agreement;
  • (b) A provision requiring a North Dakota franchisee to consent to termination penalties or liquidated damages;
  • (c) A provision requiring a North Dakota franchisee to consent to the jurisdiction of courts outside the state of North Dakota;
  • (d) A provision requiring a choice of law contrary to the North Dakota Franchise Investment Law;
  • (e) A provision restricting the time in which a North Dakota franchisee may make a claim to less than the applicable North Dakota statute of limitations;
  • (f) A provision calling for the waiver by a North Dakota franchisee of the right to trial by jury;
  • (g) A provision requiring a North Dakota franchisee to consent to a waiver of exemplary and punitive damages; and
  • (h) A provision requiring the franchisee to pay all costs and expenses incurred by the franchisor in enforcing the Franchise Agreement.
• 1. North Dakota Century Code Section 9-08-06 subjects covenants not to compete to the provisions of that statute. The covenants not to compete contained within the Franchise Agreement are subject to Section 9-08-06 and may be unenforceable under North Dakota law.
• 1. The site of any mediation or arbitration of the parties' disputes shall be at a site mutually agreeable to all parties. If all parties cannot agree upon a location, the arbitration or mediation shall be Fargo, North Dakota.
• 1. Item 5 is supplemented by the following:

Based upon the franchisor's financial condition, the North Dakota Securities Department has required a financial assurance. Therefore, franchise fee owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.

FOR THE STATE OF RHODE ISLAND

Item 17 is supplemented by adding the following language to the end of the "Summary" section of Item 17(v) (Choice of forum) and Item 17(w) (Choice of law):

§ 19-28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act."

FOR THE STATE OF SOUTH DAKOTA

Item 5 is supplemented by the following:

Based upon the franchisor's financial condition, the South Dakota Securities Regulation Office has required a financial assurance. Therefore, franchise fee owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.

The "Summary" section in Item 17(q) (Non-competition covenants during the term of the franchise) and Item 17(r) (Non-competition covenants after the franchise is terminated or expires) are amended by the following language:

Covenants not to compete upon termination or expiration of a franchise are generally unenforceable in South Dakota, except in certain instances as provided by law.

FOR THE COMMONWEALTH OF VIRGINIA

1. Item 5 and Item 7 are supplemented by the following:

The Virginia State Corporation Commission's Division of Securities and Retail Franchising requires us to defer payment of the initial franchise fee and other initial payments owed by franchisees to the franchisor until the franchisor has completed its pre-opening obligations under the franchise agreement.

1. Item 17 is supplemented by the following language:

"Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any ground for default or termination stated in the Franchise Agreement does not constitute "reasonable cause", as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable."

1. No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

FOR THE STATE OF WASHINGTON

In the event of a conflict of laws, the provision of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW (the "Act") will prevail.

RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–44)