How are the Kidokinetics FDD and Franchise Agreement amended regarding covenants restricting competition in North Dakota?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Item 17(r) of the FDD and Section 18 of the Franchise Agreement disclose the existence of certain covenants restricting competition to which Franchisee 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 Investment Law. The FDD and the Franchise Agreement are amended accordingly to the extent required by law.
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, Item 17(r) of the FDD and Section 18 of the Franchise Agreement generally address covenants restricting competition. However, the Commissioner in North Dakota has determined that these covenants, if not properly disclosed as potentially subject to Section 9-08-06 of the North Dakota Century Code, may be considered unfair, unjust, or inequitable under Section 51-19-09 of the North Dakota Franchise Investment Law. Therefore, the Kidokinetics FDD and Franchise Agreement are amended to the extent required by law to address this concern.
In practical terms, this means that the standard non-compete clauses in the Kidokinetics franchise agreement may not be fully enforceable in North Dakota as written. North Dakota law places restrictions on covenants that restrain trade, and the amendment ensures that franchisees are aware of their rights and the limitations on such restrictions within the state.
This amendment aims to protect prospective Kidokinetics franchisees in North Dakota from overly broad or unfair non-compete agreements. It is important for potential franchisees to carefully review these sections with legal counsel to understand the specific implications and how North Dakota law may modify the standard terms.