In Minnesota, can 7 Brew require franchisees to consent to liquidated damages in the Franchise Agreement?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Minn. Stat. Sec. 80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring you to consent to liquidated damages, termination penalties, or judgment notes. In addition, nothing in the disclosure document or Franchise Agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes 1984, Chapter 80C, or your rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, if a franchise is governed by Minnesota law, 7 Brew is prohibited from requiring franchisees to consent to liquidated damages. Minnesota Statute Section 80C.21 and Minnesota Rule 2860.4400J explicitly state that 7 Brew cannot mandate franchisees to agree to liquidated damages within the Franchise Agreement.
This protection ensures that 7 Brew franchisees in Minnesota are not forced into accepting potentially unfair or excessive penalties in the event of a dispute or termination of the agreement. It aims to balance the power dynamic between the franchisor and franchisee, preventing the franchisor from imposing onerous financial burdens on the franchisee through pre-determined damage amounts.
Furthermore, the FDD clarifies that nothing within the disclosure document or the Franchise Agreement can override or diminish any rights granted to franchisees under Minnesota Statutes 1984, Chapter 80C. This includes the franchisee's rights to specific procedures, forums, or remedies available under Minnesota law. This provision reinforces the state's commitment to protecting franchisees and ensuring fair business practices within the franchise relationship.
This safeguard is particularly important for prospective franchisees in Minnesota, as it prevents 7 Brew from including clauses that could financially disadvantage them. Franchisees should be aware of these protections and consult with legal counsel to fully understand their rights under Minnesota law before entering into a franchise agreement.