In Minnesota, can Best Brains require franchisees to consent to liquidated damages or termination penalties?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
MINNESOTA ADDENDUM TO THE DISCLOSURE DOCUMENT
As to franchises governed by the Minnesota franchise laws, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
- Minn. Stat. §80C.21 and Minn. Rule 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 Minnesota Statutes, Chapter 80C, or (2) franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, Minnesota franchise laws protect franchisees from certain requirements. Specifically, Best Brains is prohibited from requiring franchisees in Minnesota to consent to liquidated damages, termination penalties, or judgment notes. This protection is explicitly stated in the Minnesota Addendum to the Disclosure Document.
This provision means that Best Brains franchisees in Minnesota cannot be forced to agree in advance to financial penalties resulting from breaches of the franchise agreement or from termination of the agreement. Minnesota law aims to prevent franchisors from imposing unduly harsh financial burdens on franchisees through such clauses. This ensures that any assessment of damages or penalties would need to be determined through a fair legal process, rather than a pre-agreed consent.
Furthermore, the FDD states that nothing in the Franchise Disclosure Document or agreements can reduce any of the franchisee's rights 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. This reinforces the protection of franchisee rights under Minnesota law, ensuring that franchisees retain all available legal avenues and protections.