Is Cream allowed to require franchisees in Minnesota to consent to liquidated damages?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Minn. Stat. Sec. 80C.21 and Minn. Rule 2860.4400J prohibits us from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial or requiring the Area Developer or Franchisee to consent to liquidated damages, termination penalties or judgment notes. In addition, nothing in the Disclosure Document, Area Development Agreement or Franchise Agreement can abrogate or reduce any of Area Developer's or Franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or Area Developer's or Franchisee's rights to any procedure, forum or remedies provided for by the laws of the jurisdiction.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a Cream franchised business is operated in Minnesota, Cream is prohibited from requiring franchisees to consent to liquidated damages. Specifically, Minnesota Statute Section 80C.21 and Minnesota Rule 2860.4400J prevent Cream from including terms in their agreements that mandate franchisees to agree to liquidated damages. This protection is in place to ensure that franchisees operating in Minnesota are not subjected to unfair contractual obligations regarding financial penalties.
This provision is annexed to and forms part of the Cream Franchise Agreement and Area Development Agreement if the franchised business will be operated wholly or partly in Minnesota, or if the franchisee or area developer is a resident of, domiciled in, or actually present in Minnesota. This ensures that Minnesota law takes precedence in these specific circumstances, safeguarding the franchisee's rights and remedies as provided under Minnesota Statutes, Chapter 80C.
In practical terms, this means that Cream franchisees in Minnesota cannot be forced to pre-agree to specific financial penalties in the event of a contract breach or termination. This offers a layer of protection, ensuring that any potential damages are determined fairly and according to the laws of the jurisdiction, rather than being dictated by a pre-set agreement that may be unfavorable to the franchisee. This aligns with the broader aim of Minnesota law to protect franchisees' rights and provide a fair legal framework for franchise operations within the state.