Does the Chocolate Fish Coffee franchise disclosure document disclose the existence of covenants restricting competition contrary to NDCC Section 9-08-06?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
NORTH DAKOTA RIDER TO FRANCHISE AND MULTI-UNIT DEVELOPMENT AGREEMENT
This Rider amends the Franchise and Multi-Unit Development Agreement dated (the "Agreement"), between Chocolate Fish Franchising, LLC, a Wyoming Limited Liability Company ("Chocolate Fish Franchising") and, a ("Franchisee").
- 1. Definitions. Capitalized terms used but not defined in this Rider have the meanings given in the Agreement.
- 2. Amendments. The Agreement (and any Guaranty Agreement) is amended to comply with the following:
- (1) Restrictive Covenants: Every contract by which Franchisee, any Guarantor, or any other person is restrained from exercising a lawful profession, trade, or business of any kind is subject to NDCC Section 9-08-06.
- (2) Situs of Arbitration Proceedings: Franchisee and any Guarantor are not required to agree to the arbitration of disputes at a location that is remote from the site of Franchisee's business.
- (3) Restrictions on Forum: Franchisee and any Guarantor are not required to consent to the jurisdiction of courts outside of North Dakota.
- (4) Liquidated Damages and Termination Penalties: Franchisee is not required to consent to liquidated damages or termination penalties.
- (5) Applicable Laws: The Agreement (and any Guaranty Agreement) is governed by the laws of the State of North Dakota.
- (6) Waiver of Trial by Jury: Franchisee and any Guarantor do not waive a trial by jury.
- (7) Waiver of Exemplary and Punitive Damages: The parties do not waive exemplary and punitive damages.
- (8) General Release: Franchisee and any Guarantor are not required to sign a general release upon renewal of the Agreement.
- (9) Limitation of Claims: Franchisee is not required to consent to a limitation of claims. The statute of limitations under North Dakota law applies.
- (10) Enforcement of Agreement: The prevailing party in any enforcement action is entitled to recover all costs and expenses including attorney's fees.
- 3. Effective Date. This Rider is effective as of the Effective Date.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, the North Dakota Rider addresses restrictive covenants in accordance with NDCC Section 9-08-06. Specifically, the rider amends the Franchise and Multi-Unit Development Agreement, stating that every contract restraining a franchisee, guarantor, or any other person from practicing a lawful profession, trade, or business is subject to NDCC Section 9-08-06. This indicates that Chocolate Fish Coffee acknowledges and complies with North Dakota law regarding restrictive covenants.
Chocolate Fish Coffee's rider also ensures that franchisees and guarantors in North Dakota are not obligated to agree to arbitrate disputes in remote locations or consent to the jurisdiction of courts outside of North Dakota. Furthermore, franchisees are not required to consent to liquidated damages, termination penalties, or to waive a trial by jury, exemplary and punitive damages, or to sign a general release upon renewal of the agreement. The rider also specifies that North Dakota law governs the agreement and that the statute of limitations under North Dakota law applies, providing additional protections to franchisees.
This North Dakota Rider modifies the standard franchise agreement to align with North Dakota law, offering more favorable terms to franchisees in that state compared to the standard agreement, which is governed by Wyoming law. This ensures that Chocolate Fish Coffee franchisees in North Dakota receive the protections mandated by North Dakota law, particularly concerning restrictive covenants and dispute resolution.