Does the requirement for consent to liquidated damages or termination penalties apply to Pearce Bespoke franchisees to the extent prohibited by the NDFIL?

According to the 2025 Pearce Bespoke Franchise Disclosure Document, any requirement that a franchisee consent to liquidated damages or termination penalties will not apply if it is prohibited by the NDFIL, which is the North Dakota Franchise Investment Law. This stipulation is designed to protect franchisees in North Dakota from unfair or overly burdensome contractual obligations related to damages or penalties upon termination.

This provision ensures that Pearce Bespoke franchisees operating in North Dakota are not subjected to liquidated damages or termination penalties that are deemed unlawful under North Dakota state law. It aims to create a fairer balance of power between the franchisor and franchisee, preventing Pearce Bespoke from imposing potentially unreasonable financial burdens on franchisees.

For a prospective Pearce Bespoke franchisee in North Dakota, this means that the franchise agreement will be interpreted in accordance with North Dakota law, specifically regarding liquidated damages and termination penalties. Franchisees should consult with legal counsel to fully understand their rights and protections under the NDFIL and how it applies to their franchise agreement. This clause provides an added layer of security, ensuring that the franchisee's obligations are reasonable and legally compliant within the state of North Dakota.