In Minnesota, can Closet Storage Concepts unreasonably withhold consent to the transfer of a franchise?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Item 17 of the Disclosure Document, and the appropriate sections of the Franchise Agreements are amended by the addition of the following language to the original language that appears therein, to the extent applicable:
- "With respect to franchises governed by Minnesota law, the franchisor will comply with Minnesota Statutes Sec. 80C.14, Subds.3, 4 and 5, which require (except in certain specified cases) that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the franchise agreement and that consent to the transfer of the franchise will not be unreasonably withheld."
Source: Item 23 — RECEIPTS (FDD pages 59–238)
What This Means (2025 FDD)
According to Closet Storage Concepts's 2025 Franchise Disclosure Document, Minnesota law protects a franchisee's right to transfer their franchise. Specifically, the FDD states that Closet Storage Concepts must comply with Minnesota Statutes Sec. 80C.14, Subds. 3, 4, and 5, which includes a provision that consent to the transfer of a franchise will not be unreasonably withheld. This addendum effectively amends the original language in Item 17 of the Disclosure Document and the corresponding sections of the Franchise Agreements.
This means that if a Closet Storage Concepts franchisee in Minnesota decides to sell their franchise, Closet Storage Concepts cannot arbitrarily deny the transfer to a qualified buyer. There must be a legitimate, justifiable reason for withholding consent. This protection is designed to ensure that franchisees can realize the value of their business when they choose to exit the system, provided they find a suitable successor.
This provision is more favorable for franchisees compared to situations where franchisors have broad discretion over transfer approvals. It provides a legal basis for challenging a denial if the franchisee believes the franchisor's reasons are unreasonable. Prospective franchisees should carefully review Item 17 of the Closet Storage Concepts Disclosure Document and the Franchise Agreements, along with the Minnesota addendum, to fully understand their rights and obligations regarding franchise transfers.