Does Minnesota law allow Degree Wellness to require consent to liquidated damages from franchisees?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
Minn. Stat. § 80C.21 and Minn. Rule 2860.4400J prohibit Franchisor from requiring litigation from claims arising under Minnesota franchise laws (Minn. Stat. §§80C.01
- through 80C.22) to be conducted outside Minnesota, requiring a waiver of jury trial, and prohibits Franchisor from requiring the Franchise Owner to consent to liquidated damages, termination penalties or judgment notes.
In addition, nothing in the Agreement or Franchise Disclosure Document can abrogate or reduce any of Franchise Owner's rights as provided for in Minnesota Statutes, Chapter 80C, or Franchise Owner's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Minnesota law prohibits Degree Wellness from requiring franchisees to consent to liquidated damages. Specifically, Minn. Stat. § 80C.21 and Minn. Rule 2860.4400J prevent Degree Wellness from mandating that franchisees agree to liquidated damages, termination penalties, or judgment notes. This protection is part of Minnesota's broader effort to safeguard franchisee rights within the state.
This means that if a prospective Degree Wellness franchisee is operating in Minnesota, they cannot be forced to consent to clauses in the franchise agreement that stipulate predetermined amounts to be paid as damages or penalties upon termination. This provision ensures that franchisees are not subjected to potentially unfair or excessive financial burdens.
Furthermore, the FDD states that nothing in the franchise agreement or disclosure document 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 Minnesota law. This reinforces the protection against mandatory consent to liquidated damages and ensures that franchisees retain all legal rights and recourse available to them under Minnesota law.