In Minnesota, can Mr. Sandless require a franchisee to consent to termination penalties?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
- Item 17 of the Disclosure Document and Article 24 of the Franchise Agreement are amended by the addition of the following language to the original language that appears therein:
"Minn. Stat. Sec. 80C.21 and Rule 2860.4400J 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 agreements can abrogate or reduce any of the franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or franchisee's rights to any procedure, forum, or remedies provided for by the laws of jurisdiction."
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 30–34)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, Minnesota law offers specific protections to franchisees. Specifically, Mr. Sandless is prohibited from requiring franchisees in Minnesota to consent to termination penalties. This protection is explicitly stated in the state-specific addendum for Minnesota, which amends Item 17 of the Disclosure Document and Article 24 of the Franchise Agreement. This ensures that Mr. Sandless franchisees in Minnesota cannot be forced into agreements that include such penalties.
This provision is designed to protect franchisees from potentially unfair or overly burdensome terms in the franchise agreement. By prohibiting the franchisor from requiring consent to termination penalties, Minnesota law aims to create a more equitable balance of power between Mr. Sandless and its franchisees within the state. This means a franchisee in Minnesota would not be subject to financial penalties simply for the termination of the franchise agreement under normal circumstances.
Prospective Mr. Sandless franchisees in Minnesota should take note of this protection, as it can significantly impact their financial exposure in the event of termination. It is advisable for franchisees to carefully review the Minnesota state-specific addendum to fully understand their rights and protections under Minnesota law. This ensures that the franchisee is fully aware of the legal landscape governing their franchise agreement within the state.