In Minnesota, can Closet Storage Concepts require the franchisee to consent to termination penalties?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Stat.
Sec. 80C.21 and 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.
Source: Item 23 — RECEIPTS (FDD pages 59–238)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, Minnesota law protects franchisees from being required to consent to certain penalties. Specifically, Closet Storage Concepts is prohibited from requiring franchisees to consent to termination penalties. This protection is explicitly stated in the addendum for Minnesota.
This means that Closet Storage Concepts franchisees in Minnesota cannot be forced to agree to financial penalties or other adverse consequences if the franchise agreement is terminated. This provision aims to protect franchisees from unfair or overbearing contractual terms imposed by the franchisor. The Minnesota addendum amends Item 17 of the Franchise Disclosure Document and the franchise agreements to reflect this prohibition.
Prospective Closet Storage Concepts franchisees in Minnesota should carefully review the franchise agreement and ensure that it complies with Minnesota Statutes Sec. 80C.21 and Rule 2860.4400(J). This protection is a significant benefit for franchisees, as it prevents the franchisor from imposing potentially damaging penalties upon termination of the franchise agreement.