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Is Craters & Freighters allowed to require a franchisee to consent to liquidated damages in Minnesota?

Q: Is Craters & Freighters allowed to require a franchisee to consent to liquidated damages in Minnesota?

ITEM 17. - 2. Minn. Stat. § 80C.21 and Minn. Rule 2860.4400J prohibit us 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 any of franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction. Source: Item 22 — CONTRACTS (FDD pages 49–50)

Craters_Freighters Franchise · 2025 FDD

Answer from 2025 FDD Document

ITEM 17.

1. Minn. Stat. § 80C.21 and Minn. Rule 2860.4400J prohibit us 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 any of franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

What This Means (2025 FDD)

According to the 2025 Craters & Freighters Franchise Disclosure Document, Minnesota franchisees are protected from certain contractual requirements. Minnesota Statute § 80C.21 and Minnesota Rule 2860.4400J specifically prohibit Craters & Freighters from requiring franchisees to consent to liquidated damages. This means that the franchise agreement cannot force a franchisee to agree in advance to a specific amount of monetary damages in the event of a breach of contract.

This protection is in place to prevent franchisors from imposing unfair or overly burdensome financial penalties on franchisees. Liquidated damages clauses can sometimes be used to discourage franchisees from challenging the franchisor or to extract excessive compensation. By prohibiting such clauses, Minnesota law aims to create a more level playing field between Craters & Freighters and its franchisees.

In addition to the prohibition on liquidated damages, Minnesota law also prevents Craters & Freighters from requiring litigation to be conducted outside of Minnesota or requiring a waiver of a jury trial. These provisions collectively ensure that Minnesota franchisees have access to fair legal processes and are not forced to accept potentially disadvantageous terms in their franchise agreements.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.

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