Can Cream require a franchisee in Minnesota to consent to termination penalties?

According to the 2025 FDD, Cream is prohibited from requiring a franchisee in Minnesota to consent to termination penalties. The FDD states that Minnesota Statute 80C.21 and Minnesota Rule 2860.4400J explicitly forbid Cream from requiring a franchisee to consent to liquidated damages, termination penalties, or judgment notes. This protection applies if the franchised business is operated wholly or partly in Minnesota, or if the franchisee is a resident of, domiciled in, or actually present in Minnesota.

This means that if a Cream franchisee operates in Minnesota, they cannot be forced to agree to penalties if the franchise agreement is terminated. This provision aims to protect franchisees from potentially unfair or overreaching demands by the franchisor in the event of termination. The franchisee also cannot be required to waive their rights to a jury trial or to any procedure, forum, or remedies provided by the laws of the jurisdiction.

Furthermore, the FDD clarifies that nothing in the disclosure document, Area Development Agreement, or Franchise Agreement can reduce any of the franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or their rights to any procedure, forum, or remedies provided by the laws of the jurisdiction. This reinforces the protection afforded to Cream franchisees operating in Minnesota, ensuring that their legal rights and options remain intact.

Prospective Cream franchisees in Minnesota should be aware of these protections, as they provide a safeguard against potentially onerous termination penalties and ensure that their rights under Minnesota law are upheld. This information is crucial for making an informed decision about investing in a Cream franchise within the state.