Overview of Franchise Laws in North Dakota
North Dakota is a franchise registration state, meaning it has specific laws governing the offer and sale of franchises.
Under the North Dakota Franchise Investment Law, a franchisor must register its Franchise Disclosure Document (FDD) with the North Dakota Securities Department and pay a filing fee before offering or selling a franchise in the state. Plus, the registration must be renewed annually.
In a nutshell, the law is designed to protect prospective franchisees by ensuring they receive comprehensive disclosure. It also places several restrictions on the franchise agreement itself, prohibiting terms the state considers unfair.
For example, franchise agreements cannot force a North Dakota franchisee to consent to jurisdiction in courts outside of the state, waive their right to a jury trial, or be governed by the laws of another state.
Unlike many states, North Dakota’s franchise law does provide some relationship protections. In this case, the law requires “good cause” for a franchisor to terminate a franchise agreement, which is generally defined as the franchisee’s failure to substantially comply with the contract’s requirements.
In addition, the state also has rules regarding non-renewal of a franchise agreement. These provisions give franchisees in North Dakota a greater level of security in their ongoing business relationship compared to states without such specific relationship laws.
Here is a list of franchise lawyers you can hire in North Dakota
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Joel Libava, President.
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