What does the Mrcool Franchise Disclosure Document state regarding covenants restricting competition that do not disclose they may be subject to Section 9-08-06 of the North Dakota Century Code?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
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 statute, are unfair,
unjust and inequitable. Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, covenants restricting competition that do not disclose they may be subject to Section 9-08-06 of the North Dakota Century Code are considered unfair, unjust, and inequitable. These types of covenants not to compete are generally considered unenforceable in the State of North Dakota. This information is part of an amendment to Item 17 of the FDD, which covers renewal, termination, transfer, and dispute resolution.
For a prospective Mrcool franchisee in North Dakota, this means that any non-compete agreements that don't explicitly acknowledge the applicability of North Dakota Century Code Section 9-08-06 are likely to be viewed unfavorably by the state. This offers some protection to the franchisee, as these covenants are generally unenforceable in North Dakota.
This amendment aims to protect franchisees from overly restrictive non-compete clauses that could hinder their ability to operate or pursue other business ventures after the franchise agreement ends. It is important for franchisees to understand their rights under North Dakota law and to consult with legal counsel to ensure that any non-compete agreements they sign are fair and enforceable.