In Minnesota, can Crown Gold Exchange require the franchisee to consent to termination penalties?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
Minnesota Rules 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. In addition, nothing in the Franchise Disclosure Document or agreement(s) can abrogate or reduce (1) any of the franchisee's rights as provided for in Minnesota Statutes, Chapter 80C or (2) franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
With respect to franchises governed by Minnesota law, the franchisor will comply with Minnesota Statutes, Section 80C.14, Subd. 3-5, which require (except in certain specified cases) (1) 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 (2) that consent to the transfer of the franchise will not be unreasonably withheld.
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, Minnesota law prohibits Crown Gold Exchange from requiring franchisees to consent to liquidated damages, termination penalties, or judgment notes. The Minnesota Addendum to the Disclosure Document explicitly states this prohibition, referencing Minnesota Statutes, Section 80C.21 and Minnesota Rules 2860.4400(J). This means that any clause within the franchise agreement that mandates a franchisee's consent to such penalties is unenforceable in Minnesota.
Furthermore, the addendum clarifies that nothing in the Franchise Disclosure Document or any related agreements can reduce or eliminate a franchisee's rights as provided in Minnesota Statutes, Chapter 80C, or their rights to any procedure, forum, or remedies available under Minnesota law. This provision ensures that Minnesota franchisees retain all legal protections afforded to them under state law, regardless of what the franchise agreement might otherwise stipulate.
Crown Gold Exchange must also comply with Minnesota Statutes, Section 80C.14, Subd. 3-5, regarding termination and non-renewal. Except in specific cases, Crown Gold Exchange must provide a franchisee with 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal. Additionally, Crown Gold Exchange cannot unreasonably withhold consent to the transfer of the franchise. These regulations provide significant protections for franchisees operating in Minnesota, ensuring fair treatment and reasonable notice periods in the event of termination or non-renewal.