In Minnesota, can a C12 Group franchisee consent to liquidated damages?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
Minn. Rule Part 2860.4400J. prohibits a franchisee from waiving his rights to a jury trial or waiving his rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction, or consenting to liquidated damages, termination penalties or judgment notes. With respect to Franchises governed by Minnesota law, any provisions to the contrary in the disclosure document and/or the franchise agreement are hereby deemed to be deleted.
Source: Item 23 — RECEIPTS (FDD pages 46–137)
What This Means (2025 FDD)
According to the 2025 C12 Group Franchise Disclosure Document, Minnesota law prohibits a franchisee from consenting to liquidated damages. This means that any clause in the franchise agreement that requires a franchisee to pay a predetermined amount of damages in the event of a breach is unenforceable in Minnesota.
This protection is in place to prevent franchisors from imposing unfair or excessive penalties on franchisees. Liquidated damages clauses can be particularly problematic if they are not reasonably related to the actual harm suffered by the franchisor. Minnesota law prioritizes the franchisee's rights by ensuring they cannot waive certain protections.
For a prospective C12 Group franchisee in Minnesota, this means that they cannot be forced to agree to a liquidated damages clause. If such a clause exists in the franchise agreement, it is deemed to be deleted with respect to franchises governed by Minnesota law. This provides an added layer of security for franchisees, ensuring they are not subject to potentially unreasonable financial penalties.
It is important for prospective franchisees to carefully review the franchise agreement and disclosure document to understand their rights and obligations under Minnesota law. Consulting with an attorney experienced in franchise law is advisable to ensure full comprehension of these protections.