Does the Brueggers Bagels franchise agreement contain covenants restricting competition that do not disclose that such covenants will be subject to Section 9-08-06, N.D.C.C.?

According to Brueggers Bagels's 2025 Franchise Disclosure Document, the North Dakota Securities Commissioner has identified specific issues related to franchise agreements in North Dakota. One of these issues pertains to restrictive covenants. Specifically, the North Dakota Securities Commissioner considers it unfair, unjust, or inequitable if Brueggers Bagels's franchise disclosure documents mention covenants that restrict competition, which are contrary to Section 9-08-06, N.D.C.C., but do not further disclose that these covenants will be subject to this statute. This means that the FDD should explicitly state that any restrictive covenants are subject to North Dakota law.

For a prospective Brueggers Bagels franchisee in North Dakota, this information is crucial. It ensures that the franchisee is aware that any restrictions on competition they agree to are governed by North Dakota law. This disclosure helps protect the franchisee's rights and provides transparency regarding the legal framework surrounding restrictive covenants. Without this disclosure, a franchisee might unknowingly agree to terms that are later deemed unenforceable or unfair under North Dakota law.

To address these concerns, Brueggers Bagels includes a North Dakota Addendum to the franchise agreement. This addendum acknowledges the requirements of the North Dakota Franchise Investment Law and the policies of the State of North Dakota Securities Commission. The addendum amends the franchise agreement to ensure compliance with North Dakota law, providing additional protection and clarity for franchisees operating in North Dakota.