In North Dakota, can Deer Solution require liquidated damages from franchisees?

According to Deer Solution's 2025 Franchise Disclosure Document, the franchisor cannot enforce provisions requiring North Dakota franchisees to consent to termination or liquidated damages. This protection is explicitly stated in the North Dakota Franchise Agreement Amendment, which amends Article 16 of the standard Franchise Agreement. This amendment is in place due to the North Dakota Franchise Investment Law, specifically Section 51-19, which aims to protect franchisees from unfair or inequitable terms.

This means that if a Deer Solution franchisee in North Dakota breaches the franchise agreement, Deer Solution cannot automatically impose a pre-determined amount of damages (liquidated damages) as a penalty. The franchisor must instead pursue actual damages through legal means, proving the financial harm they suffered as a result of the franchisee's breach. This provides a significant benefit to franchisees in North Dakota, as it prevents the franchisor from potentially overcharging them through excessive liquidated damages clauses.

Furthermore, the North Dakota FDD Amendment supplements Item 17, stating that any provision requiring a franchisee to consent to termination or liquidation damages has been determined to be unfair, unjust, and inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. This reinforces the state's stance on protecting franchisees from potentially abusive financial penalties, ensuring a fairer balance of power in the franchise relationship. Prospective franchisees in North Dakota should be aware of these protections and consult with legal counsel to fully understand their rights under state law.