Does the 360 Painting franchise agreement contain a liquidated damages clause?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
State Cover Page and Item 17, Additional Disclosures:
Minn. Stat. Sec. 80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be conducted outside of Minnesota, requiring waiver of a jury trial or requiring the franchisee to consent to liquidated damages, termination penalties or judgment notes. In addition, nothing in the Disclosure Document shall abrogate or reduce any of your rights as provided for in Minn. Stat. Sec. 80C, or your rights to any procedure, forum or remedies provided for by the laws of the jurisdiction.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 360 Painting Franchise Disclosure Document, the standard franchise agreement may include a liquidated damages clause. However, the enforceability of such a clause can vary by state. For example, Minnesota law specifically prohibits 360 Painting from requiring franchisees to consent to liquidated damages. This means that if a 360 Painting franchisee operates in Minnesota, the liquidated damages clause in their franchise agreement would not be enforceable.
For prospective 360 Painting franchisees, this means the presence and enforceability of a liquidated damages clause depends heavily on the state in which they operate their franchise. In states like Minnesota, franchisees are protected from such clauses. In other states, the clause may be enforceable, potentially requiring the franchisee to pay a predetermined amount if they terminate the agreement early or breach its terms.
It is important for potential franchisees to carefully review the state-specific addenda in Exhibit H of the 360 Painting FDD, as these addenda outline any modifications or exceptions to the standard franchise agreement based on state law. Franchisees should also consult with a legal professional to understand the implications of a liquidated damages clause in their specific circumstances and jurisdiction. This will help them make informed decisions about entering into a franchise agreement with 360 Painting.