In North Dakota, are liquidated damages allowed in the Bumper Man Franchise Agreement?

According to Bumper Man's 2025 Franchise Disclosure Document, liquidated damages are prohibited by law in the State of North Dakota. Specifically, Section 18(b) of the Franchise Agreement is deleted for franchisees in North Dakota. This means that Bumper Man cannot include a clause in the franchise agreement that requires a franchisee to pay a predetermined amount of damages in the event of a breach of contract.

This prohibition protects franchisees in North Dakota from potentially unfair or excessive penalties. Liquidated damages clauses can sometimes be used to penalize franchisees severely, even if the actual damages suffered by the franchisor are minimal. By disallowing such clauses, North Dakota law aims to ensure a fairer balance of power between Bumper Man and its franchisees.

Prospective franchisees in North Dakota should be aware of this protection and ensure that their Franchise Agreement does not contain any clauses related to liquidated damages. If such a clause is present, it is unenforceable under North Dakota law. This provision offers a significant advantage to franchisees operating in North Dakota, as it limits the potential financial risks associated with breaching the franchise agreement.