In Minnesota, can Desi District require a franchisee to consent to liquidated damages?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
Minnesota Statutes, Section 80C.21 and 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.
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, if a franchisee is operating in Minnesota, Desi District is prohibited from requiring the franchisee to consent to liquidated damages. This protection is explicitly stated in the Minnesota Addendum to the Disclosure Document. This addendum modifies the standard franchise agreement to comply with Minnesota Statutes, Section 80C.21 and Minnesota Rules 2860.4400(J).
This means that any clause within the standard Desi District franchise agreement that might suggest a franchisee's consent to liquidated damages is unenforceable in Minnesota. Liquidated damages are pre-determined amounts of money that a franchisee must pay in the event of a breach of contract.
For a prospective Desi District franchisee in Minnesota, this is a significant benefit. It ensures that they cannot be forced to agree to potentially unfair or excessive penalties at the outset of the franchise agreement. Instead, any damages would need to be determined through a fair legal process, if necessary. This provision aims to protect franchisees from overreaching by the franchisor and ensures a more equitable balance of power.
It is important for potential franchisees to carefully review the Minnesota Addendum and understand their rights under Minnesota law. They should also consult with a franchise attorney to ensure full comprehension of the implications of this clause and how it affects their specific circumstances.