What specific part of the Circle K disclosure document and agreements is deleted in its entirety for franchises operating in North Dakota due to Section 51-19-09 of the North Dakota Franchise Investment Law?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
) and the Federal Arbitration Act (9 U.S.C. § 1, et seq.), the Franchise Agreement will be governed by the laws of the state of North Dakota.
7. Item 17.
Notwithstanding anything to the contrary in the Franchise Disclosure Document, covenants not to compete may be subject to Section 9-08-06 of the North Dakota Century Code and unenforceable in the state of North Dakota if contrary to Section 9-08-06.
ADDENDUM TO FRANCHISE AGREEMENT FOR THE STATE OF NORTH DAKOTA
This Addendum will apply to franchises sold in the state of North Dakota and will be for the purpose of complying with North Dakota statutes and regulations. Notwithstanding anything which may be contained in the body of the Franchise Agreement to the contrary, the Agreement will be amended to include the following:
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- Section 3.2.F of the Franchise Agreement requires the franchisee to sign a general release upon renewal of the franchise agreement. The Commissioner has determined this to be unfair, unjust, and inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. As a result, the provision as it appears in the disclosure document and agreements used in North Dakota is deleted in its entirety.
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- Article 12.7(B) is hereby modified to delete any part thereof that is inconsistent with Section 51-19-09 of the North Dakota Century Code.
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- Section 14.7.B of the Franchise Agreement requires the franchisee to consent to termination or liquidated damages. The Commissioner has determined this to be unfair, unjust, and inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. As a result, the provision as it appears in the disclosure document and agreements used in North Dakota is deleted in its entirety.
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- Article 18 of the Franchise Agreement provides that the franchisee must agree to the arbitration or mediation of disputes, such arbitration or mediation to be held in Arizona. The Commissioner has determined that franchise agreements, which provide that parties agree to the arbitration or mediation of disputes at a location that is remote from the site of the franchisee's business, are unfair, unjust, or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, several provisions are deleted in their entirety for franchises operating in North Dakota to comply with Section 51-19-09 of the North Dakota Franchise Investment Law. These deletions affect specific sections of both the Franchise Agreement and the Disclosure Document.
Specifically, Section 3.2.F of the Franchise Agreement, which requires franchisees to sign a general release upon renewal, is entirely deleted. Similarly, Section 14.7.B of the Franchise Agreement, which mandates franchisee consent to termination or liquidated damages, is also removed. In the Disclosure Document, Item 17(c), concerning the general release upon renewal, and Item 17(i), related to consent for termination or liquidated damages, are deleted in their entirety as well. Furthermore, Section 18.6 of the Franchise Agreement, which stipulates that franchisees must consent to the jurisdiction of courts in Arizona, is also deleted for North Dakota franchises.
These modifications ensure that Circle K's franchise agreements adhere to North Dakota law, protecting franchisees from terms deemed unfair or inequitable by the North Dakota Securities Commissioner. Prospective franchisees in North Dakota should carefully review the addendum to the franchise agreement to understand these specific changes and how they impact their rights and obligations.