The Franchise Memorandum

In Hockey Enter., Inc., v. Total Hockey Worldwide, LLC, 2011 U.S. Dist. LEXIS 2201 (D. Minn. Jan. 10, 2011), a Minnesota federal court dismissed a Florida franchisee’s claim against franchisor Total Hockey Worldwide, LLC, its parent, and a number of its officers for breach of the Minnesota Franchise Act. A Florida-based franchisee of two hockey-training businesses had filed suit against the Total Hockey defendants alleging, among other things, that they violated the Minnesota Franchise Act by failing to register the franchisor in Minnesota and making several false representations that induced the franchisee to purchase the franchises. Despite a Florida choice of law provision contained in the franchise agreements, the franchisee argued that the Minnesota-based Total Hockey defendants were liable for violations under the Minnesota Franchise Act because Minnesota law did not permit waiver of rights secured by the statute.

In rejecting the franchisee’s argument, the court found that the statute’s anti-waiver provision protected only a person who was a Minnesota resident (or Minnesota corporation) at the time that person or organization acquired a franchise, or a person (regardless of residence) who was acquiring a franchise that would operate in Minnesota. The corporate franchisee was not organized or incorporated in Minnesota, and the franchises at issue were to be operated in Florida. Accordingly, the court found that the Minnesota anti-waiver provision did not void the parties’ Florida choice of law provision and dismissed the claim under the act.