In North Dakota, can Camp Margaritaville require franchisees to consent to liquidated damages?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
rce; it being the intent of this proviso that the non-waiver provisions of General Business Law Sections 687.4 and 687.5 be satisfied.
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- Item 17(d) is amended to add the following sentence: The franchisee may terminate the agreement on any grounds available by law.
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- Items 17(v) and (w) are amended to add the following sentence: The forgoing choice of law should not be considered a waiver of any right conferred upon the franchisor or upon the franchisee by Article 33 of the General Business law of the state of New York.
- Item 17 is amended to add the following at the end:
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 applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the franchisor cannot require franchisees in North Dakota to consent to liquidated damages. The FDD states that Section 51-19-09 of the North Dakota Franchise Investment Law considers any requirement to consent to liquidated damages as unfair, unjust, and inequitable. Consequently, the disclosure document amends Item 17 paragraph (i) by removing the subsection concerning the payment of liquidated damages. This means that Camp Margaritaville franchisees in North Dakota are not obligated to agree to liquidated damages clauses within their franchise agreements.
This protection is further reinforced by the North Dakota Rider to the Margaritaville RV Resorts, LLC Franchise Agreement. The rider specifies that no statement, questionnaire, or acknowledgement signed by a franchisee can waive any claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by the franchisor. This provision supersedes any other conflicting terms in the franchise agreement, ensuring that franchisees retain their rights under North Dakota law.
In practical terms, a prospective Camp Margaritaville franchisee in North Dakota should be aware that they cannot be compelled to consent to liquidated damages. This provides a significant legal protection, as liquidated damages clauses can sometimes be unfavorable to franchisees. Franchisees should carefully review the franchise agreement and any related documents to ensure compliance with North Dakota law and consult with legal counsel if they have any concerns about their rights and obligations.