What does the Commissioner determine to be unfair, unjust, and inequitable regarding termination or liquidated damages for The Standardx franchise in North Dakota?

According to The Standardx's 2025 Franchise Disclosure Document, the North Dakota Commissioner has determined that termination or liquidated damages are unfair, unjust, and inequitable under Section 51-19-09 of the North Dakota Franchise Investment Law. However, The Standardx and the franchisee agree to enforce these provisions to the extent the law allows. This determination is specifically noted in the context of royalty fees upon termination, liquidated damages upon condemnation, and liquidated damages upon termination, as outlined in Item 6 of the Franchise Disclosure Document.

This means that while The Standardx's standard franchise agreement may include clauses regarding termination penalties or liquidated damages, these clauses may not be fully enforceable in North Dakota. The state's franchise law aims to protect franchisees from overly burdensome financial penalties in the event of termination or condemnation.

Prospective franchisees in North Dakota should be aware that the enforceability of termination and liquidated damages provisions may be limited. It is important to seek legal counsel to fully understand the implications of these provisions and how they are interpreted under North Dakota law. Franchisees should also discuss with The Standardx what specific aspects of the termination or liquidated damages clauses might be affected and how the company intends to balance its rights with the protections afforded by North Dakota law.