What sections of The Standardx Franchise Agreement are modified by the addition of language regarding termination penalties/liquidated damages?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following language is added to the end of the "Remarks" column of the rows in the Item 6 chart of the Franchise Disclosure Document, titled "Royalty fee upon termination," "Liquidated damages upon condemnation," and "Liquidated damages upon termination":
The Commissioner has determined termination or liquidated damages to be unfair, unjust and inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. However, we and you agree to enforce these provisions to the extent the law allows.
Minn. Rule Part 2860.4400J prohibits a franchisee from waiving rights to a jury trial; waiving rights to any procedure, forum or remedies provided by the laws of the jurisdiction; or consenting to liquidated damages, termination penalties or judgment notes. However, we and you will enforce these provisions in our Franchise Agreement to the extent the law allows.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, modifications regarding termination penalties and liquidated damages are made to specific sections of the Franchise Agreement, particularly for franchisees in North Dakota and Minnesota. In North Dakota, language is added to the "Remarks" column of Item 6, specifically addressing "Royalty fee upon termination," "Liquidated damages upon condemnation," and "Liquidated damages upon termination." This addition states that the Commissioner has determined these damages to be unfair but that The Standardx will enforce the provisions to the extent the law allows.
For Minnesota, the FDD indicates that Minn. Rule Part 2860.4400J prohibits franchisees from consenting to liquidated damages or termination penalties. However, The Standardx states that they will enforce these provisions in their Franchise Agreement to the extent the law allows.
These modifications suggest that The Standardx is attempting to balance the enforcement of its standard franchise agreement terms with the legal restrictions imposed by certain state franchise laws. Prospective franchisees should be aware of these state-specific modifications and how they might affect their obligations and rights upon termination of the franchise agreement.