In Minnesota, can All Team require a franchisee to consent to liquidated damages?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything contained in the foregoing Franchise Agreement and Franchise Disclosure Document ("FDD") to the contrary, the following provisions of the Minnesota Franchise Act shall apply to any franchise or franchisee located in the State of Minnesota, which shall control to the extent of any inconsistency:
MINN.
STAT.
SECTION 80C.21 and MINNESOTA RULES 2860.4400(J) prohibit the franchisor from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring the franchisee to consent to liquidated damages, termination penalties or judgment notes.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, if a franchisee is located in Minnesota, All Team is prohibited from requiring the franchisee to consent to liquidated damages. This protection is explicitly stated within the Minnesota Franchise Act, specifically MINN. STAT. SECTION 80C.21 and MINNESOTA RULES 2860.4400(J). This clause takes precedence over any conflicting terms in the franchise agreement or the FDD itself.
This means that All Team franchisees in Minnesota cannot be forced to agree in advance to specific financial penalties in case of a contract breach or termination. The purpose of this provision is to protect franchisees from potentially unfair or excessive financial burdens imposed by the franchisor.
For a prospective All Team franchisee in Minnesota, this is a significant benefit. It ensures that any financial penalties would need to be justified and determined through a fair legal process, rather than being pre-determined and potentially one-sided. This protection aligns with the broader aim of the Minnesota Franchise Act to balance the power dynamic between franchisors and franchisees, safeguarding the franchisee's rights and interests.