How is Section 15.4 (Restrictive Covenants) of the Cinnabon Franchise Agreement amended regarding enforceability in North Dakota?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: Receipts]
-
- Any general release language contained in the Franchise Agreement will not relieve us or any other person, directly or indirectly, from any liability imposed by the North Dakota Franchise Investment Law.
-
- Section 15.4 (Restrictive Covenants) of the Franchise Agreement is amended by adding the following: "Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota."
-
- Section 16.3.I. of the Franchise Agreement is amended by adding the following punctuation and language at the end of this section, before the period: "; provided, however, this release will not apply to claims as you may have under the North Dakota Franchise Investment Law."
-
- The third sentence of Section 19.1.A. (Arbitration) is deleted.
-
- Section 19.4 (Limitation of Claims) of the Franchise Agreement is modified to state that the statute of limitations under North Dakota Law will apply.
-
- Section 19.5 (Waiver of Jury Trial) of the Franchise Agreement is deleted.
-
- The provisions of the Franchise Agreement on governing law, jurisdiction, and choice of law will not be a waiver of any right conferred on you by the North Dakota Franchise Investment Law.
RHODE ISLAND ADDENDUM TO FRANCHISE AGREEMENT
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, Section 15.4 of the Franchise Agreement, which pertains to restrictive covenants, is specifically amended for franchisees in North Dakota. The amendment clarifies that covenants not to compete, which are typically included in the Franchise Agreement, are generally considered unenforceable in the State of North Dakota.
This amendment is crucial for prospective Cinnabon franchisees in North Dakota as it addresses the enforceability of non-compete clauses. Generally, non-compete clauses restrict a franchisee's ability to engage in similar business activities during and after the franchise agreement term. However, due to North Dakota's legal stance on these covenants, Cinnabon explicitly states that such restrictions are typically unenforceable in that state.
For a potential Cinnabon franchisee in North Dakota, this means that the restrictions on competition post-termination or during the franchise term may not be legally binding. This could provide more flexibility for the franchisee's future business endeavors. However, it is important for franchisees to consult with a legal expert to fully understand the implications and scope of this amendment, as specific circumstances can affect enforceability. This amendment reflects Cinnabon's adaptation to state-specific franchise laws, ensuring compliance and transparency in its franchising practices.