In Minnesota, is Black Bear Diner prohibited from requiring a franchisee to consent to termination penalties?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
Minnesota Statutes, Section 80C.21 and Minnesota Rule 2860.4400(J) prohibit the franchisor from requiring litigation to be conducted outside Minnesota, requiring waiver of 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 any of 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.
Section 22.4 of the Franchise Agreement shall be amended to add:
;provided, however, that Minnesota law provides that no action may be commenced under Minn. Stat. Sec. 80 C.17 more than three (3) years after the cause of action accrues.
Section 22.6 of the Franchise Agreement is deleted to the extent required by Minnesota Franchises Law.
Pursuant to Minnesota Rule 2860.4400J, the Franchisee shall not be required to consent to the Franchisor obtaining injunctive relief. However, Franchisor may seek injunctive relief. In addition, the court shall determine if a bond is required and the amount of such bond.
Each provision of this Addendum shall be effective only to the extent that the jurisdictional requirements of the Minnesota Law applicable to the provisions are met independent of this Addendum. To the extent this Addendum shall be deemed to be inconsistent with any terms or conditions of said Franchise Agreement or exhibits or attachments thereto, the terms of this Addendum shall govern.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, Minnesota Statutes, Section 80C.21 and Minnesota Rule 2860.4400(J) prohibit Black Bear Diner from requiring a franchisee to consent to liquidated damages, termination penalties, or judgment notes. This protection is explicitly stated in Item 23 of the FDD. This means that Black Bear Diner cannot include clauses in its franchise agreement that force a franchisee to agree to these types of financial penalties in advance.
Furthermore, the FDD clarifies that nothing within the document or the agreements associated with it can reduce any of the franchisee's rights as provided for in Minnesota Statutes, Chapter 80C. This extends to the franchisee's rights to any procedure, forum, or remedies provided by the laws of the jurisdiction. This ensures that Minnesota franchisees retain all the legal protections afforded to them under state law.
To ensure compliance with Minnesota law, Section 22.4 of the Franchise Agreement will be amended to reflect the statute of limitations for actions commenced under Minn. Stat. Sec. 80 C.17, which is three years. Additionally, Section 22.6 of the Franchise Agreement is deleted to the extent required by Minnesota Franchises Law. These amendments demonstrate Black Bear Diner's effort to align its franchise agreement with Minnesota's specific legal requirements, providing additional clarity and protection for franchisees operating in that state.
Finally, the FDD states that pursuant to Minnesota Rule 2860.4400J, a Black Bear Diner franchisee in Minnesota cannot be required to consent to the Franchisor obtaining injunctive relief. However, Black Bear Diner retains the right to seek injunctive relief, with the court determining if a bond is required and the amount of such bond. This addendum is effective only to the extent that the jurisdictional requirements of the Minnesota Law applicable to the provisions are met independent of this Addendum, and in case of inconsistencies, the terms of the addendum shall govern.