Does Spray Net disclose in its franchise disclosure documents that covenants restricting competition are subject to NDCC Section 9-08-06?

According to Spray Net's 2025 Franchise Disclosure Document, the document includes a North Dakota addendum that addresses restrictive covenants. Specifically, the addendum states that the North Dakota Securities Commissioner considers it unfair, unjust, or inequitable for franchise disclosure documents to disclose covenants restricting competition without also disclosing that such covenants are subject to NDCC Section 9-08-06. This disclosure is required under NDCC Section 51-19-09.

For a prospective Spray Net franchisee in North Dakota, this means that any non-compete agreements or clauses within the franchise agreement must be explicitly stated as being subject to North Dakota state law regarding covenants restricting competition. This ensures that the franchisee is aware that these covenants are not absolute and are governed by state regulations.

This disclosure aims to protect franchisees by ensuring they are fully informed about the limitations and enforceability of restrictive covenants under North Dakota law. It prevents franchisors from imposing overly broad or unfair non-compete terms that could unduly restrict a franchisee's ability to operate after the franchise agreement ends. Spray Net must ensure its franchise agreements for North Dakota franchisees comply with this requirement to avoid being deemed unfair, unjust, or inequitable by the North Dakota Securities Commissioner.