How are covenants not to compete upon termination or expiration of the Pearce Bespoke franchise agreement affected by North Dakota law?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Covenants not to compete upon termination or expiration of the franchise agreement are subject to NDCC § 9-08-06.
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- To the extent required by the NDFIL, arbitration proceedings shall take place at a location mutually agreed upon by you and us.
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- Any requirement that you consent to liquidated damages or termination penalties shall not apply to the extent prohibited by the NDFIL;
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- Any requirement that you consent to (i) the jurisdiction of courts outside of North Dakota, (ii) the application of laws of a state other than North Dakota, (iii) waiver of jury trial or (iv) waiver of exemplary and punitive damages shall not apply to the extent prohibited by the NDFIL;
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- Any release required as a condition to a renewal of the franchise agreement shall not apply to the extend prohibited by the NDFIL;
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- Any requirement that you consent to a limitation of claims shall not apply to the extent prohibited by the NDFIL. As applicable, the statute of limitations under North Dakota law shall control.
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- The prevailing party in any enforcement action is entitled to recover all costs and expenses, including attorney's fees.
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- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- The North Dakota Securities Commissioner requires us to defer payment of the initial franchise fee and other initial payments owed by franchisees to the franchisor until the franchisor has completed its pre-opening obligations under the franchise agreement.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, covenants not to compete upon termination or expiration of the franchise agreement are subject to North Dakota Century Code (NDCC) § 9-08-06. This means that the enforceability and scope of any non-compete clauses in the Pearce Bespoke franchise agreement will be interpreted and governed by North Dakota state law.
For a prospective Pearce Bespoke franchisee in North Dakota, this is an important consideration. NDCC § 9-08-06 likely places certain restrictions or requirements on non-compete agreements to ensure they are reasonable and not overly broad. These restrictions could relate to the duration, geographic scope, and the types of activities restricted.
The FDD also states that to the extent required by the North Dakota Franchise Investment Law (NDFIL), arbitration proceedings shall take place at a location mutually agreed upon by the franchisee and Pearce Bespoke. Any requirement that the franchisee consent to liquidated damages or termination penalties, jurisdiction of courts outside of North Dakota, application of laws of a state other than North Dakota, waiver of jury trial, waiver of exemplary and punitive damages, or a limitation of claims shall not apply to the extent prohibited by the NDFIL. The statute of limitations under North Dakota law shall control. The prevailing party in any enforcement action is entitled to recover all costs and expenses, including attorney's fees. No statement, questionnaire, or acknowledgment signed by a franchisee shall waive any claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by Pearce Bespoke.