Does the Desi District franchise agreement require franchisees to consent to liquidated damages or termination penalties?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to the 2024 Desi District Franchise Disclosure Document, franchisees in North Dakota are not required to consent to liquidated damages or termination penalties. This protection is specifically outlined in the North Dakota Rider to the Franchise and Multi-Unit Development Agreement.
This means that if a Desi District franchisee is operating in North Dakota, the franchise agreement cannot force them to agree to pay specific financial penalties in the event of early termination or other breaches of contract. This is a significant benefit for franchisees in North Dakota, as it protects them from potentially burdensome financial obligations if the franchise relationship ends prematurely.
It is important to note that this protection only applies to Desi District franchisees operating in North Dakota, due to the specific rider for that state. Franchisees in other states may be subject to different terms regarding liquidated damages and termination penalties as outlined in the standard franchise agreement. Prospective franchisees should carefully review the franchise agreement and any state-specific riders to understand their rights and obligations in the event of termination or breach of contract.