In Minnesota, is Embassy Suites allowed to require a franchisee to consent to liquidated damages, termination penalties, or judgment notes?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- Minnesota Statutes, Sections 80C.21 and Minnesota Rule 2860.4400J prohibit Franchisor from requiring Franchisee to consent to liquidated damages, termination penalties or judgment notes. Subsection 13.4 of the Franchise Agreement is hereby deleted in its entirety and replaced with the following:
"Damages Upon Termination By Us. If we terminate the Agreement under Subsection 13.1 or 13.2 above, you acknowledge your default will cause substantial damage to us. You therefore agree that if we terminate this Agreement, the termination will not be our sole remedy, and you will also be liable to us for all damages and losses we have suffered arising from the early termination of this Agreement to the same extent as if you had improperly terminated the Agreement. You also agree that you will remain liable for all other obligations and claims under this Agreement, including obligations following termination under Subsections 13.6, 9.6, 10.3 and Section 14 and other damages suffered by us arising out of your breach or default."
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, Embassy Suites is prohibited from requiring a franchisee in Minnesota to consent to liquidated damages, termination penalties, or judgment notes. This protection is explicitly stated in the Minnesota Addendum to the Franchise Agreement. Specifically, Minnesota Statutes, Sections 80C.21 and Minnesota Rule 2860.4400J, prevent Embassy Suites from including such requirements in their agreements within the state of Minnesota.
To ensure compliance with Minnesota law, Subsection 13.4 of the Franchise Agreement, which typically addresses damages upon termination, is replaced entirely for Minnesota franchisees. The revised subsection clarifies that if Embassy Suites terminates the agreement due to the franchisee's default, the franchisee acknowledges that their default will cause substantial damage to Embassy Suites. However, the franchisee will be liable for damages and losses resulting from the early termination to the same extent as if the franchisee had improperly terminated the agreement. The franchisee remains responsible for all other obligations and claims under the agreement, including obligations following termination and other damages resulting from their breach or default.
This addendum ensures that Minnesota franchisees are not subject to the specific penalties that the standard Embassy Suites agreement might otherwise impose, providing a level of protection against potentially onerous financial burdens upon termination. Prospective franchisees in Minnesota should carefully review the Minnesota Addendum in conjunction with the standard Franchise Agreement to fully understand their rights and obligations under Minnesota law.