Is a Fly To Fit franchisee required to consent to liquidated damages or termination penalties?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
NORTH DAKOTA RIDER TO FRANCHISE AND MULTI-UNIT DEVELOPMENT AGREEMENT
This Rider amends the Franchise and Multi-Unit Development Agreement dated (the "Agreement"), between Fly To Fit Franchise, LLC, a Delaware Limited Liability Company ("Fly To Fit Franchise") and, a ("Franchisee").
- 1. Definitions. Capitalized terms used but not defined in this Rider have the meanings given in the Agreement.
- 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.
- 3. Effective Date. This Rider is effective as of the Effective Date.
Source: Item 23 — RECEIPTS (FDD pages 44–134)
What This Means (2024 FDD)
According to the 2024 Fly To Fit Franchise Disclosure Document, whether a franchisee is required to consent to liquidated damages or termination penalties depends on the state in which they are operating. Specifically, the North Dakota Rider to the Franchise and Multi-Unit Development Agreement states that franchisees in North Dakota are not required to consent to liquidated damages or termination penalties.
This means that if a Fly To Fit franchisee operates in North Dakota, they are protected from being forced to agree to clauses that would require them to pay specific amounts as damages upon termination or for failing to meet certain obligations. This protection is written into the agreement through the North Dakota Rider, which amends the standard franchise agreement to comply with North Dakota law.
For prospective Fly To Fit franchisees outside of North Dakota, it's important to carefully review the franchise agreement and any applicable state-specific addenda to understand whether similar protections exist. Franchisees should seek legal counsel to fully understand their rights and obligations regarding liquidated damages and termination penalties in their specific state.