Are covenants not to compete upon termination or expiration of Kitchen Solvers franchise agreements generally enforceable in North Dakota?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
Item 17 The following statements are added to Item 17:
Pursuant to the North Dakota Franchise Investment Law, any provision requiring franchisees to consent to the jurisdiction of courts outside North Dakota or to consent to the application of laws of a state other than North Dakota is void, provided that the Franchise Agreement may provide for arbitration in a forum outside of North Dakota.
Any general release the franchisee is required to assent to is not intended to nor shall it act as a release, estoppel or waiver of any liability Franchisor may have incurred under the North Dakota Franchise Investment Law.
Covenants not to compete upon termination or expiration of franchise agreements are generally not enforceable in the State of North Dakota, except in certain instances as provided by law.
Source: Item 23 — Receipts (FDD pages 49–190)
What This Means (2025 FDD)
According to Kitchen Solvers's 2025 Franchise Disclosure Document, covenants not to compete upon termination or expiration of franchise agreements are generally not enforceable in North Dakota. This information is specifically outlined in the addendum to the Kitchen Solvers Franchise Agreement for the state of North Dakota. This addendum serves to ensure compliance with North Dakota statutes and regulations.
For a prospective Kitchen Solvers franchisee in North Dakota, this means that the standard non-compete clauses included in the franchise agreement, particularly those mentioned in Subparagraphs 12.B and 14.C.1(g), are typically unenforceable in the state. This provides a significant advantage to the franchisee, as it allows them more freedom to pursue other business ventures after the termination or expiration of their franchise agreement without the fear of legal repercussions related to competition.
However, the FDD also notes that there may be certain instances, as provided by law, where such covenants could be enforceable. It is important for potential franchisees to seek legal counsel to fully understand the specific circumstances under which a non-compete agreement might be enforced in North Dakota. This ensures they are aware of their rights and obligations under the franchise agreement and North Dakota law.
This provision is a notable deviation from standard franchise agreements, which often include strict non-compete clauses to protect the franchisor's market and brand. The North Dakota addendum reflects the state's specific legal environment and provides a more franchisee-friendly approach regarding post-termination business activities.