Does Minnesota law allow Degree Wellness to require consent to termination penalties 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.
- B.
With respect to franchises governed by Minnesota law, Franchisor will comply with Minn. Stat. § 80C.14, subds. 3, 4, and 5, which require, except in certain specified cases, that (1) Franchise Owner be given ninety (90) days' notice of termination (with sixty (60) days to cure) and one-hundred eighty (180) days' notice for non-renewal of the Agreement and (2) consent to the transfer of a franchise by Franchise Owner will not be unreasonably withheld whenever the franchisee to be substituted meets the present qualifications and standards required of the franchisees by us.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Minnesota law does not allow Degree Wellness to require franchisees to consent to termination penalties. Specifically, Minn. Stat. § 80C.21 and Minn. Rule 2860.4400J prohibit Degree Wellness from requiring a franchisee to consent to liquidated damages, termination penalties, or judgment notes. This protection is part of Minnesota's broader effort to safeguard the rights of franchisees within the state.
This provision means that Degree Wellness franchisees in Minnesota cannot be forced to agree in advance to financial penalties if the franchise agreement is terminated. This protects the franchisee from potentially unfair or excessive financial burdens upon termination. The Minnesota Amendment to the Franchise Agreement explicitly states that nothing in the agreement or Franchise Disclosure Document can reduce any of the Franchise Owner's rights as provided for in Minnesota Statutes, Chapter 80C.
Furthermore, Minnesota law requires that Degree Wellness comply with Minn. Stat. § 80C.14, subds. 3, 4, and 5, regarding termination and non-renewal notices. Franchisees must be given ninety (90) days' notice of termination (with sixty (60) days to cure) and one-hundred eighty (180) days' notice for non-renewal of the Agreement, except in certain specified cases. Additionally, Degree Wellness cannot unreasonably withhold consent to the transfer of a franchise if the proposed transferee meets the current qualifications and standards for franchisees.
These regulations reflect Minnesota's commitment to protecting franchisees' rights and ensuring fair practices within the franchising system. Prospective Degree Wellness franchisees in Minnesota should be aware of these protections, as they provide significant safeguards against potentially overbearing contractual terms and termination penalties.