In Minnesota, can the Bombs Away franchisor require the franchisee to consent to liquidated damages?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
In the State of Minnesota only, this Disclosure Document is amended as follows:
- Minnesota Statutes, Section 80C.21 and Minnesota Rules 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 agreement(s) 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 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, if you are opening a franchise in Minnesota, Bombs Away cannot require you to consent to liquidated damages. The Minnesota Addendum to the disclosure document explicitly states that Minnesota Statutes, Section 80C.21 and Minnesota Rules 2860.4400(J) prohibit the franchisor from requiring the franchisee to consent to liquidated damages. This protects franchisees from being forced into agreements that predetermine the amount of damages payable in certain breach of contract scenarios.
This provision is specific to Minnesota and aims to protect franchisees' rights within the state. It ensures that franchisees are not compelled to agree to potentially unfair or excessive damage amounts at the outset of the franchise agreement. This aligns with Minnesota's broader regulations that seek to balance the power dynamic between franchisors and franchisees.
Prospective Bombs Away franchisees in Minnesota should be aware of this protection, as it prevents the franchisor from imposing a contractual obligation to accept liquidated damages. This means that any damage claims would need to be assessed and determined through a fair and impartial process, rather than being predetermined by a clause in the franchise agreement. Franchisees should ensure that the franchise agreement complies with Minnesota law and does not contain any clauses that contravene these protections.