Under what circumstances might a condition, stipulation, or provision in the Belocal Franchise Agreement be considered void and unenforceable in Minnesota?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Under Minnesota Statutes, Section 80C.21, to the extent that any condition, stipulation, or provision contained in the Franchise Agreement (including any choice of law provision) purports to bind any person who, at the time of acquiring a franchise is a resident of Minnesota, or, in the case of a partnership or corporation, organized or incorporated under the laws of Minnesota, or purporting to bind a person acquiring any franchise to be operated in Minnesota to waive compliance with the Minnesota Franchise Law, such condition, stipulation, or provision may be void and unenforceable under the non-waiver provision of the Minnesota Franchise Law.
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- Minnesota Rule 2860.4400(J) prohibits 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. This does not bar an exclusive arbitration clause. In addition, nothing the disclosure document or agreement can abrogate or reduce any of franchisee's right as provided for in Minnesota Statutes, Chapter 80C, or franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
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- Minnesota Rule 2860.4400(D) prohibits a franchisor from requiring a franchisee to assent to a general release from liability imposed by Minnesota Statutes, Section 80C.01 to 80C.22. This does not bar the voluntary settlement of disputes.
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- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, several conditions could render a stipulation in the franchise agreement void and unenforceable in Minnesota.
First, any provision that binds a Minnesota resident (or a partnership/corporation organized under Minnesota laws) acquiring a Belocal franchise, or that requires a person operating a franchise in Minnesota to waive compliance with the Minnesota Franchise Law, may be voided. This is due to the non-waiver provisions within the Minnesota Franchise Law, which protect franchisees from unknowingly relinquishing their legal rights.
Second, Minnesota Rule 2860.4400(J) specifically prohibits Belocal from requiring franchisees to conduct litigation outside of Minnesota, waive their right to a jury trial, or consent to liquidated damages, termination penalties, or judgment notes. While an exclusive arbitration clause is permitted, any clause conflicting with franchisee rights under Minnesota Statutes, Chapter 80C, regarding procedures, forums, or remedies, is invalid. Additionally, Minnesota Rule 2860.4400(D) prevents Belocal from requiring franchisees to agree to a general release from liability imposed by Minnesota Statutes, Section 80C.01 to 80C.22, although voluntary settlements of disputes are allowed.
Finally, any statement, questionnaire, or acknowledgment signed by a Belocal franchisee at the start of their franchise relationship cannot waive claims under state franchise law, including claims of fraud, or disclaim reliance on statements made by Belocal or its representatives. This provision overrides any conflicting terms in franchise documents, ensuring franchisees retain their rights and protections under Minnesota law.