If an Itan Franchise Agreement includes covenants restricting competition, how is the agreement amended in North Dakota?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the North Dakota Franchise Investment Law (the "North Dakota Franchise Law"), the Disclosure Document, Franchise Agreement and Supplemental Agreements are amended as follows:
Covenants not to compete are generally considered unenforceable in the State of North Dakota, pursuant to Section 51-19-09 of the North Dakota Franchise Law.
Item 17 of the Disclosure Document and certain provisions in the Franchise Agreement and Supplemental Agreements include certain covenants restricting competition to which you must agree.
The Commissioner has held that covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statue, are unfair, unjust, or inequitable within the intent of Section 51-19- 09 of the North Dakota Franchise Law.
The Disclosure Document, Franchise Agreement and Supplemental Agreements are amended accordingly to the extent required by law.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the Franchise Agreement and related documents are amended to comply with North Dakota law regarding covenants not to compete. The FDD states that covenants not to compete are generally considered unenforceable in North Dakota under Section 51-19-09 of the North Dakota Franchise Law. Because Item 17 of the Disclosure Document, the Franchise Agreement, and Supplemental Agreements include covenants restricting competition, these are amended to the extent required by law.
This means that if you are an Itan franchisee in North Dakota, the standard non-compete clauses in your agreement may not be fully enforceable. North Dakota law generally disfavors such restrictions. The specific scope and enforceability of any non-compete provision would likely be determined by North Dakota courts if a dispute arises.
It is important for prospective Itan franchisees in North Dakota to understand that while the franchise agreement may contain non-compete clauses, their enforceability is questionable. Franchisees should consult with a legal professional to fully understand their rights and obligations under North Dakota law, especially concerning any restrictions on their ability to operate a similar business after the franchise agreement expires or is terminated.