Under what conditions can a waiver of obligation or restriction be valid between Pearce Bespoke and the Franchisee?
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.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke FDD, the validity of waivers of claims by a franchisee is specifically addressed within the context of North Dakota franchise law. For franchisees in North Dakota, certain waivers that might typically be included in franchise agreements are unenforceable to the extent they are prohibited by the North Dakota Franchise Investment Law (NDFIL). This includes waivers related to claims of fraud in the inducement or disclaimers of reliance on statements made by the franchisor. This addendum ensures that franchisees in North Dakota retain their rights under state franchise law, regardless of any conflicting terms in the franchise agreement.
Specifically, the FDD states that any requirement for the franchisee to consent to certain conditions will not apply if prohibited by the NDFIL. These conditions include consenting 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. Additionally, any release required as a condition to a renewal of the franchise agreement will not apply if prohibited by the NDFIL, and any requirement that the franchisee consent to a limitation of claims is also unenforceable to the extent prohibited by the NDFIL. The statute of limitations under North Dakota law will control in such cases.
Furthermore, no statement, questionnaire, or acknowledgment signed by a franchisee in connection with starting the franchise can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by the franchisor. This provision overrides any other conflicting term in any document related to the franchise. This ensures that franchisees cannot inadvertently waive their legal rights through standard paperwork at the beginning of their franchise relationship. Therefore, a Pearce Bespoke franchisee should be aware of the protections afforded to them by North Dakota state law, particularly regarding waivers and releases, to ensure their rights are fully protected throughout the franchise relationship.