Under Minnesota law, can Azal Coffee require a franchisee to consent to termination penalties?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
RANCHISE REGISTRATION AND DISCLOSURE LAW IN ANY COURT OF COMPETENT JURISDICTION IN MARYLAND.
ANY CLAIM ARISING UNDER THE MARYLAND FRANCHISE REGISTRATION AND DISCLOSURE LAW MUST BE BROUGHT WITHIN THREE YEARS AFTER THE GRANT OF THE FRANCHISE.
MINNESOTA
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- The following is in addition to the disclosures in Items 13 and 17 of the Franchise Disclosure Document:
- (a) 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. In addition, nothing in the Franchise Disclosure Document or agreements can abrogate or reduce: (1) any of the franchisee's rights as provided for in MINN. STAT. CHAPTER 80C; or (2) franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
- (b) With respect to franchises governed by Minnesota law, the franchisor will comply with MINN. STAT. SECTION 80C.14 SUBD.
Source: Item 23 — RECEIPTS (FDD pages 51–204)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, Minnesota Statute Section 80C.21 and Minnesota Rules 2860.4400(J) explicitly prohibit Azal Coffee from requiring franchisees to consent to liquidated damages, termination penalties, or judgment notes. This protection is in place to safeguard the franchisee's rights under Minnesota law.
This means that any clause within the franchise agreement that mandates a franchisee to agree to such penalties is unenforceable in Minnesota. The FDD emphasizes that nothing within the disclosure document or the agreements can reduce any of the franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or their rights to any procedure, forum, or remedies provided by the laws of the jurisdiction.
Furthermore, the FDD highlights that no statement, questionnaire, or acknowledgment signed by a franchisee at the start of the franchise relationship can waive any claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on behalf of Azal Coffee. This provision supersedes any other conflicting term in any document executed in connection with the franchise, reinforcing the protection afforded to franchisees under Minnesota law.