Are references to liquidated damages in the Belocal franchise agreement deleted to the extent required by Minnesota law?

According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement and/or franchise disclosure document is amended to delete all references to liquidated damages to the extent required by Minnesota law. However, this deletion does not excuse the franchisee from liability for actual or other damages. Furthermore, the formula for liquidated damages in the Agreement and/or franchise disclosure document will be admissible as evidence of actual damages. This amendment ensures compliance with Minnesota law while preserving Belocal's ability to recover actual damages.

This means that while Belocal cannot enforce a liquidated damages clause that violates Minnesota law, the franchisor can still pursue a franchisee for actual financial losses resulting from a breach of the franchise agreement. The original liquidated damages formula, even though unenforceable as a strict penalty, can be used as a guide to determine the extent of actual damages suffered by Belocal.

For a prospective Belocal franchisee in Minnesota, this is a beneficial provision. It protects them from potentially excessive or unfair pre-determined penalties. However, it is important to understand that franchisees are still responsible for any real financial harm they cause to Belocal if they violate the franchise agreement. Franchisees should consult with a legal professional to fully understand their rights and obligations under Minnesota law and the franchise agreement.