Can Degree Wellness require a franchisee to consent to liquidated damages under Minnesota law?

According to Degree Wellness's 2025 Franchise Disclosure Document, Minnesota law impacts certain aspects of the franchise agreement. Specifically, Minnesota Statute § 80C.21 and Minnesota Rule 2860.4400J prevent Degree Wellness from requiring franchisees to consent to liquidated damages if the claims arise under Minnesota franchise laws (Minn. Stat. §§80C.01 through 80C.22). This protection is designed to ensure that franchisees operating in Minnesota are not forced into unfair agreements regarding financial penalties.

This means that Degree Wellness franchisees in Minnesota cannot be compelled to agree to liquidated damages, termination penalties, or judgment notes as part of their franchise agreement, particularly for claims arising under Minnesota franchise law. This provision aims to protect the franchisee's rights and ensure a fair legal process within the state. The FDD also clarifies that nothing in the franchise agreement or disclosure document can reduce any of the franchisee's rights, procedures, or remedies as provided by Minnesota law.

Furthermore, the Degree Wellness FDD includes a Minnesota amendment to the franchise agreement to ensure compliance with Minnesota law. This amendment reinforces that the franchisor must comply with specific Minnesota statutes regarding termination and non-renewal notices, as well as the transfer of a franchise. It also addresses the franchisee's right to use trademarks, ensuring that these rights are protected under Minnesota law. Therefore, prospective franchisees in Minnesota should carefully review this amendment and understand their rights under Minnesota franchise law.