What North Dakota law is relevant to the Pearce Bespoke franchise agreement?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO THE PEARCE BESPOKE FRANCHISING LLC DISCLOSURE DOCUMENT AND FRANCHISE AGREEMENT REQUIRED BY THE STATE OF NORTH DAKOTA
The North Dakota Securities Commissioner requires that certain provisions contained in franchise documents be amended to be consistent with North Dakota law, including the North Dakota Franchise Investment Law, NDCC § 51-19 et seq. ("NDFIL"). To the extent that (a) the jurisdictional requirements of the NDFIL are met and (b) this Franchise Disclosure Document and Franchise Agreement contain provisions that are inconsistent with the following, such provisions are hereby amended:
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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, several provisions of North Dakota law are relevant to the franchise agreement, particularly the North Dakota Franchise Investment Law (NDCC § 51-19 et seq.), referred to as "NDFIL". An addendum to the franchise agreement is required by the North Dakota Securities Commissioner to ensure consistency with North Dakota law.
Specifically, covenants not to compete upon termination or expiration of the franchise agreement are subject to NDCC § 9-08-06. The NDFIL also dictates that arbitration proceedings must occur at a mutually agreed-upon location between the franchisee and Pearce Bespoke. Furthermore, any requirements for franchisees to consent to liquidated damages, termination penalties, jurisdiction of courts outside North Dakota, application of laws from other states, waiver of jury trials, or waiver of exemplary and punitive damages are not applicable to the extent prohibited by the NDFIL.
Additional protections under the NDFIL include stipulations that any release required for franchise agreement renewal is not applicable if prohibited by the NDFIL, and any requirement to consent to a limitation of claims is also not applicable to the extent prohibited by the NDFIL, with the statute of limitations under North Dakota law controlling. The prevailing party in any enforcement action is entitled to recover all costs and expenses, including attorney's fees. Moreover, no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Pearce Bespoke or its representatives. Finally, the North Dakota Securities Commissioner mandates that Pearce Bespoke defer payment of the initial franchise fee and other initial payments until Pearce Bespoke has fulfilled its pre-opening obligations under the franchise agreement.