Are covenants not to compete upon termination or expiration of the Monicals Pizza Area Development Agreement generally enforceable in North Dakota?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
| between Monical Pizza Corporation and | This Addendum to the Area Development Agreement is agreed to this day of, 20, by and | |
|---|---|---|
| 1. | In recognition of The North Dakota Securities Commission, the following provisions contained in the Area Development Agreement are amended to be consistent with North Dakota law, including the North Dakota Franchise Investment Law, North Dakota Century Code Addendum, Chapter 51-19, §51-19-01 et seq.: | |
| | with North Dakota law, the covenant may not be enforceable. | Covenants not to compete upon termination or expiration of the Area Development Agreement are generally enforceable in the State of North Dakota in limited instances as provided by law. If the Agreement contains a covenant not to complete that is inconsistent |
| | conflict of laws, North Dakota Law shall control. | Section 13.1 of the Area Development Agreement is amended to state in the event of a |
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, covenants not to compete upon termination or expiration of the Area Development Agreement are generally unenforceable in North Dakota, except in limited instances as provided by law. This information is specifically outlined in an addendum for the state of North Dakota, which amends the Area Development Agreement to align with North Dakota law. This means that the standard non-compete clauses in the Monicals Pizza Area Development Agreement may not be fully enforceable in North Dakota.
For a prospective Monicals Pizza area developer in North Dakota, this could provide some flexibility after the agreement terminates or expires. However, it's important to understand what constitutes those 'limited instances' where such covenants may still be enforceable. This could depend on specific circumstances or legal interpretations at the time. The FDD also states that in the event of a conflict of laws, North Dakota Law will control.
Given this uncertainty, a potential Monicals Pizza area developer should seek legal counsel to fully understand the implications of North Dakota law on the enforceability of non-compete clauses. It would be prudent to clarify what specific situations might allow for enforcement, despite the general unenforceability. Understanding these nuances is crucial for making an informed decision about investing in a Monicals Pizza area development in North Dakota.