Does the Endless Summer Sweets franchise disclosure document disclose the existence of covenants restricting competition contrary to NDCC Section 9-08-06?

According to the 2024 Endless Summer Sweets Franchise Disclosure Document, the North Dakota Addendum addresses restrictive covenants. Specifically, the Securities Commissioner has determined that franchise disclosure documents disclosing covenants restricting competition, which may be contrary to NDCC Section 9-08-06, must further disclose that such covenants will be subject to the statute. This means that Endless Summer Sweets is required to inform potential North Dakota franchisees that any non-compete agreements they sign will be governed by North Dakota law.

This disclosure is intended to protect franchisees in North Dakota by ensuring they are aware that the enforceability and scope of non-compete agreements are subject to state law. NDCC Section 9-08-06 likely places certain restrictions or limitations on such covenants, and Endless Summer Sweets must acknowledge this in their disclosure. This addendum aims to prevent franchisees from unknowingly agreeing to terms that may not be fully enforceable under North Dakota law.

For a prospective Endless Summer Sweets franchisee in North Dakota, this addendum serves as an important notice. It highlights that the standard non-compete clauses in the franchise agreement are not absolute and are subject to legal scrutiny under North Dakota statutes. Therefore, franchisees should carefully review these clauses with legal counsel to understand their rights and obligations under North Dakota law. They should also be aware that the Securities Commissioner has deemed it unfair to present these covenants without acknowledging the applicability of NDCC Section 9-08-06.