Can Fly To Fit require a franchisee in Minnesota to consent to liquidated damages?
Fly_To_Fit 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 44–134)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, Minnesota franchisees are protected from being required to consent to liquidated damages. The Minnesota Addendum explicitly states that Minnesota Statutes and Rules prohibit Fly To Fit from requiring a franchisee to consent to liquidated damages. This protection is in place to ensure that franchisees are not subjected to unfair or overreaching contractual terms.
This provision is favorable for prospective Fly To Fit franchisees in Minnesota, as it prevents the franchisor from imposing mandatory liquidated damages clauses in the franchise agreement. Liquidated damages clauses can be financially burdensome, as they often require franchisees to pay a predetermined amount in the event of a breach of contract or termination, regardless of the actual damages suffered by the franchisor.
By prohibiting mandatory consent to liquidated damages, Minnesota law aims to balance the power dynamic between franchisor and franchisee, ensuring a fairer contractual relationship. Franchisees should still carefully review all terms of the franchise agreement, but this addendum provides an additional layer of protection against potentially onerous financial penalties.