Does Minnesota law allow Bambu to require the franchisee to consent to liquidated damages?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
Minnesota Statutes, Section 80C.21 and Minnesota Rule 2860.4400(J) prohibit Bambu from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring Franchisee to consent to liquidated damages, termination penalties, or judgment notes. In addition, nothing in the Franchise Disclosure Document or this Agreement can abrogate or reduce (1) any of Franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or (2) Franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction. The above language has been included in this Agreement as a condition to registration. Bambu and Franchisee do not agree with the above language and believes that each of the provisions of the Agreement are fully enforceable. Bambu and Franchisee intend to fully enforce
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, Minnesota Statutes, Section 80C.21 and Minnesota Rule 2860.4400(J) prohibit Bambu from requiring a franchisee to consent to liquidated damages. This means that Bambu cannot include a clause in its franchise agreement that forces a franchisee to agree to a predetermined amount of money to be paid in the event of a breach of contract. This protection is in place to safeguard the franchisee's rights under Minnesota law.
This restriction is a condition of registration in Minnesota, although Bambu states that it does not agree with this language and believes that all provisions of the Franchise Agreement are fully enforceable. Bambu intends to fully enforce all provisions, including venue, choice-of-law, and arbitration provisions, relying on federal pre-emption under the Federal Arbitration Act. This indicates a potential legal disagreement between Minnesota state law and Bambu's preferred contractual terms.
Despite Bambu's intent to enforce all agreement provisions, the FDD acknowledges that Minnesota law takes precedence in certain areas to protect franchisees. Prospective franchisees in Minnesota should be aware of these protections and consult with legal counsel to understand their rights fully. This clause ensures that franchisees operating in Minnesota are not compelled to accept liquidated damages clauses, providing them with additional legal safeguards.