Does Minnesota law allow Bambu to require the franchisee to consent to termination penalties?
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 law does not allow Bambu to require a franchisee to consent to termination penalties. Specifically, Minnesota Statutes, Section 80C.21 and Minnesota Rule 2860.4400(J) explicitly prohibit Bambu from requiring franchisees to agree to liquidated damages, termination penalties, or judgment notes. This protection is in place to safeguard the franchisee's rights under Minnesota Statutes, Chapter 80C, and their access to legal procedures, forums, and remedies provided by Minnesota law.
Despite this legal restriction, Bambu states in the FDD 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 of the agreement and other signed documents, including venue, choice-of-law, arbitration, and dispute resolution provisions, relying on federal pre-emption under the Federal Arbitration Act. This indicates a potential area of conflict or legal interpretation between state law and the franchisor's stance.
For a prospective franchisee in Minnesota, this means that while the state law offers protection against mandatory consent to termination penalties, Bambu's stated intention to enforce all agreement provisions, relying on federal pre-emption, introduces uncertainty. A franchisee should seek legal counsel to understand the implications of this conflict and the enforceability of specific clauses in the Franchise Agreement, especially concerning dispute resolution and choice of law.