Which Minnesota rule restricts or prohibits liquidated damages provisions for Burros Fries franchises?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
The following states have statutes which restrict or prohibit the imposition of liquidated damages provisions:
CALIFORNIA Civil Code Section 1671
INDIANA IC 23.2-2.5-2 MINNESOTA Rule 2860.4400
State courts also restrict the imposition of liquidated damages. The imposition of liquidated damages is also restricted by fair practice laws, contact law, and state and federal court decisions.
For franchises governed by the laws of the state of MINNESOTA, liquidated damage provisions are void.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, Minnesota Rule 2860.4400 restricts or prohibits the imposition of liquidated damages provisions in franchise agreements. Additionally, for franchises governed by the laws of Minnesota, liquidated damage provisions are void.
This means that if a Burros Fries franchise is located in Minnesota, the franchisor may not be able to enforce a clause in the franchise agreement that requires the franchisee to pay a predetermined amount of damages in the event of a breach of contract. Liquidated damages clauses are designed to provide a simple and predictable remedy for breaches, but some states like Minnesota have found them to be unfair or unenforceable under certain circumstances.
Prospective Burros Fries franchisees in Minnesota should be aware of this restriction and consult with an attorney to understand the implications for their franchise agreement. It is important to note that while liquidated damages may not be enforceable, the franchisor may still be able to pursue other remedies for a breach of contract, such as actual damages or injunctive relief.