Does the Cool Binz Franchise Disclosure Document disclose that restrictive covenants contrary to Section 908-06, N.D.C.C., will be subject to the statute?

According to Cool Binz's 2025 Franchise Disclosure Document, the document addresses restrictive covenants in North Dakota. Specifically, the FDD cover page states that the Securities Commissioner has deemed it unfair, unjust, or inequitable to North Dakota franchisees to have franchise disclosure documents that disclose restrictive covenants contrary to Section 908-06, N.D.C.C., without further disclosing that such covenants will be subject to the statute. This indicates that Cool Binz is aware of the North Dakota statute and its potential impact on restrictive covenants.

This disclosure is important for prospective Cool Binz franchisees in North Dakota because it informs them that the enforceability of any non-compete agreements they sign may be limited by North Dakota law. While Cool Binz states that they will enforce the covenants to the maximum extent the law allows, this statement acknowledges that the law may not allow full enforcement. Franchisees should be aware that North Dakota courts may interpret Section 908-06, N.D.C.C., to restrict the scope or duration of non-compete clauses, potentially allowing franchisees to compete with Cool Binz under circumstances where the franchise agreement might otherwise prohibit it.

Cool Binz also includes additional disclosures for North Dakota franchisees to ensure compliance with North Dakota franchise law. These disclosures cover areas such as required releases upon renewal or assignment/transfer, consent to termination or liquidated damages, selection of arbitration sites, consent to jurisdiction of courts outside of North Dakota, and the application of Michigan law. These stipulations collectively aim to protect the rights of franchisees in North Dakota and ensure that the franchise agreement adheres to local legal requirements.