Franchise Termination Cure Periods by State

What must a Minnesota franchisor do before terminating for a default?

A Minnesota franchisor needs both good cause and a completed notice-and-cure process before terminating. The notice must be written, list every reason, and come at least 90 days before termination, and the franchisee must have failed to correct the stated reasons in the 60 days after receiving it.

Minn. Stat. § 80C.14, subd. 3 sets two separate requirements:

1. Good cause. Paragraph (b) provides that “No person may terminate or cancel a franchise except for good cause,” and defines good cause as “failure by the franchisee to substantially comply with the material and reasonable franchise requirements imposed by the franchisor.” The listed examples include “the bankruptcy or insolvency of the franchisee” and conduct “which materially impairs the good will associated with the franchisor’s trademark.”
2. Notice and a failed cure. Paragraph (a) requires the written notice with all reasons at least 90 days ahead, and it permits termination only if the franchisee “fails to correct the reasons stated for termination or cancellation in the notice within 60 days of receipt of the notice,” subject to the three immediate grounds covered below.

After a franchisee’s bankruptcy filing, 11 U.S.C. § 365(e)(1) provides, subject to the exceptions in paragraph (2), that an executory contract of the debtor “may not be terminated or modified” “solely because of a provision in such contract or lease that is conditioned on” the debtor’s insolvency or financial condition or “the commencement of a case under this title.”

Under 11 U.S.C. § 362(a), except as provided in subsection (b), the filing also “operates as a stay, applicable to all entities, of” “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate,” and subsection (d) provides for relief from the stay “On request of a party in interest and after notice and a hearing.”

Whether the rule applies starts with Minnesota’s definition of a franchise. Under Minn. Stat. § 80C.01, subd. 4, the core definition is an agreement between two or more persons with three elements: a grant of the right to sell “using the franchisor’s trade name, trademark, service mark, logotype, advertising, or other commercial symbol,” a “community of interest in the marketing of goods or services,” and a franchise fee paid “directly or indirectly.” A distribution deal can meet that test. In Dunn v. National Beverage Corp., 745 N.W.2d 549 (Minn. 2008), the jury found that a juice distributor’s relationship with its supplier was a franchise, a finding the Minnesota Supreme Court noted was not before it.

How do the 90-day notice and 60-day cure period work together in Minnesota?

The two periods run from the same written notice. The franchisee’s 60 days to correct run from its receipt of the notice, and the termination date must be at least 90 days after the notice. If the franchisee corrects the reasons stated within the 60 days, the statute’s condition for termination is not met.

Three features of § 80C.14, subd. 3(a) shape how a franchisor should draft the notice:

1. The notice fixes the reasons. The statute requires a notice “setting forth all the reasons,” and it measures the cure against “the reasons stated for termination or cancellation in the notice.” I suggest listing every default you intend to rely on, because a reason missing from the notice is not one the franchisee was told to correct.
2. Receipt starts the cure clock. The statute counts the 60 days from receipt (“within 60 days of receipt of the notice”). I suggest a delivery method that proves the date of receipt, because the cure deadline depends on it.
3. The termination date sits at least 90 days out. The notice must come “at least 90 days in advance of termination or cancellation,” so a franchisor should name an effective date no earlier than that.

I also suggest stating what a completed cure looks like (the amount to pay, the inspection item to fix, the report to file), because the statute measures the cure against the reasons stated in the notice.

When can a Minnesota franchisor end a franchise without the full cure period?

Only on three grounds does a Minnesota termination notice take effect “immediately upon receipt”: voluntary abandonment of the franchise relationship, a conviction tied to the business, and a goodwill-impairing default left uncured after at least 24 hours’ written notice to cure.

Minn. Stat. § 80C.14, subd. 3(a) lists the three grounds:

1. “voluntary abandonment of the franchise relationship by the franchisee”
2. “the conviction of the franchisee of an offense directly related to the business conducted pursuant to the franchise”
3. “failure to cure a default under the franchise agreement which materially impairs the good will associated with the franchisor’s trade name, trademark, service mark, logotype or other commercial symbol after the franchisee has received written notice to cure of at least 24 hours in advance thereof”

The third ground still requires a written notice to cure, only a shorter one. Unpaid royalties, missed reports, and repeated defaults do not appear on the list. Each still needs good cause under paragraph (b) and the full 90-day notice and 60-day correction period under paragraph (a).

How does nonrenewal differ from termination for default in Minnesota?

Declining to renew at the end of the term follows its own rule: 180 days’ written notice before expiration and a chance to recover the business’s value. That rule does not apply when the nonrenewal is for good cause and the franchisee has failed to correct the reasons under the termination rule.

Under Minn. Stat. § 80C.14, subd. 4, a franchisor may not fail to renew unless “the franchisee has been given written notice of the intention not to renew at least 180 days in advance of the expiration of the franchise.” The franchisee must also have had “an opportunity to operate the franchise over a sufficient period of time to enable the franchisee to recover the fair market value of the franchise as a going concern.” Those conditions drop away only where the failure to renew is “for good cause as defined in subdivision 3, paragraph (b), and the franchisee has failed to correct reasons for termination as required by subdivision 3.”

So a franchisor that wants to decline renewal over a default, without the 180-day notice, needs the franchisee to have failed to correct that default through the subdivision 3 process. The same subdivision adds a flat bar: “No franchisor may refuse to renew a franchise if the refusal is for the purpose of converting the franchisee’s business premises to an operation that will be owned by the franchisor for its own account.” My page on Minnesota termination, nonrenewal, and transfer rules covers the franchisee’s side of these provisions.

Which franchise agreement terms cannot shorten the Minnesota cure period?

A franchise agreement cannot waive the Minnesota notice and cure steps for a franchisee the statute protects, and a choice of another state’s law does not change that. A Minnesota rule also bars requiring the franchisee to consent to termination penalties.

Three provisions do this work:

1. Waivers void. Minn. Stat. § 80C.21 voids “Any condition, stipulation or provision, including any choice of law provision,” that waives compliance with the Act if it binds a person who “at the time of acquiring a franchise is a resident of this state,” a partnership or corporation “organized or incorporated under the laws of this state,” or “a person acquiring any franchise to be operated in this state.”
2. Every agreement must conform. Minn. Stat. § 80C.14, subd. 2 requires that all franchise agreements, “other than those classifications of franchises specifically recognized by the commissioner under subdivision 1,” conform to subdivisions 3 and 4. Subdivision 1 lets the commissioner recognize classifications of franchises “including but not limited to” motor vehicle fuel, motor vehicle, and hardware franchises, and franchises requiring “an initial, unfinanced investment in excess of $200,000.”
3. No required penalties or releases. Minn. R. 2860.4400 makes it unfair and inequitable to require a franchisee “to consent to liquidated damages, termination penalties, or judgment notes,” or to require a release of liability under the Act, while providing “that this part shall not bar the voluntary settlement of disputes.”

When I analyzed one franchisor’s form agreement for a Minnesota client, it charged an early-closing fee measured by the royalties left in the term, and I advised that Minnesota law does not let a franchisor require the franchisee to agree to that fee. The same form treated a default under a related company’s agreements with the franchisor as a default under this franchise. If your form carries either term, I suggest reading it against the rule and the statute before you rely on it in a default. My page on early-termination fees covers how those fees are structured.

What happens when a franchisor skips the Minnesota notice and cure steps?

A franchisee terminated without the statutory notice, cure, or good cause can sue for damages, rescission, or other relief, recover attorney’s fees with actual damages, and seek a temporary injunction, which a court may grant without a bond (a temporary restraining order requires one). Officers and directors can share the liability.

The exposure comes from four provisions:

1. Damages and other relief. Under Minn. Stat. § 80C.17, subd. 1, a violator “shall be liable to the franchisee or subfranchisor who may sue for damages caused thereby, for rescission, or other relief as the court may deem appropriate.”
2. Fees and costs. Subdivision 3 allows recovery of “the actual damages sustained by the plaintiff together with costs and disbursements plus reasonable attorney’s fees.”
3. Personal liability. Subdivision 2 makes “every principal executive officer or director of a corporation so liable” liable “jointly and severally with and to the same extent as” the franchisor, “unless the person who would otherwise be liable hereunder had no knowledge of or reasonable grounds to know of the existence of the facts by reason of which the liability is alleged to exist.”
4. A fast injunction. Under Minn. Stat. § 80C.14, subd. 1, “A violation of this section is enjoinable by a court of competent jurisdiction,” and “A temporary injunction may be granted under this section without requiring the posting of any bond or security.” A bond is required for a temporary restraining order.

Dunn shows both sides of the fee rule. The jury “specifically found that National Beverage terminated Twin City’s franchise rights without good cause” but awarded nothing for that violation, and the Minnesota Supreme Court held that a fee award “requires that the plaintiff seek and recover some relief under the franchise act.” The franchisor in Dunn avoided a fee award because the jury awarded no relief under the Act. My page on remedies under the Minnesota Franchise Act covers each remedy in more depth.

How do cure period mandates compare in other states?

This page compares six other states’ franchise relationship statutes, each with its own cure period, and only Wisconsin’s general rule matches Minnesota’s 90-day notice and 60-day cure. California requires at least 60 days, Iowa 30 to 90 days, Illinois, Michigan, and Washington a reasonable opportunity that need not exceed 30 days, and Wisconsin 60 days to rectify within a 90-day notice.

Each state’s rule, in its own words:

• California. Under Cal. Bus. & Prof. Code § 20020, good cause requires notice “at least 60 days in advance of the termination and a reasonable opportunity, which in no event shall be less than 60 days from the date of the notice of noncompliance, to cure the failure.” The statute adds that “The period to exercise the right to cure shall not exceed 75 days unless there is a separate agreement between the franchisor and franchisee to extend the time.” Section 20021 lists events on which “immediate notice of termination without an opportunity to cure, shall be deemed reasonable,” including fees unpaid “within five days after receiving written notice that such fees are overdue.”
• Illinois. Under 815 ILCS 705/19, good cause includes a failure to cure “after being given notice thereof and a reasonable opportunity to cure such default, which in no event need be more than 30 days.” A franchisee who “repeatedly fails to comply with the lawful provisions of the franchise or other agreement” can be terminated without notice and a cure opportunity.
• Iowa. Under Iowa Code section 537A.10, the franchisee has “a reasonable period of time to cure the default, which in no event shall be less than thirty days or more than ninety days,” and for nonpayment “the period to cure need not exceed thirty days.” Franchises outside that section’s date limit fall under Iowa Code section 523H.7, which uses the same thirty-to-ninety-day language.
• Michigan. MCL 445.1527 makes a term allowing termination without good cause “void and unenforceable,” and good cause includes a failure to cure after “written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.”
• Washington. RCW 19.100.180 requires “a reasonable opportunity, which in no event need be more than thirty days, to cure such default,” and, for a default that “cannot reasonably be cured within thirty days,” looks to whether the franchisee failed “to initiate within thirty days substantial and continuing action to cure such default.”
• Wisconsin. Wis. Stat. section 135.04 requires “at least 90 days’ prior written notice,” a notice that “shall state all the reasons,” and 60 days for the dealer “to rectify any claimed deficiency.” The statute adds that “If the deficiency is rectified within 60 days the notice shall be void.” For nonpayment, the dealer “shall be entitled to written notice of such default, and shall have 10 days in which to remedy such default from the date of delivery or posting of such notice.” In White Hen Pantry v. Buttke, 301 N.W.2d 216 (1981), the Wisconsin Supreme Court held that for nonpayment “the grantor must provide the dealer with at least 90 days’ prior written notice,” and that “The notice must provide that the dealer has 10 days in which to remedy such default from the date of delivery or posting of such notice.”

The short-path grounds also differ. Wisconsin’s notice rules “shall not apply if the reason for termination, cancellation or nonrenewal is insolvency, the occurrence of an assignment for the benefit of creditors or bankruptcy.” After a bankruptcy filing, the limit in 11 U.S.C. § 365(e)(1), which applies “Notwithstanding a provision in an executory contract or unexpired lease, or in applicable law,” and the stay under 11 U.S.C. § 362(a), both described in the Minnesota section above, also apply. Washington lets a franchisor end the franchise without notice or cure after “three willful and material breaches of the same term of the franchise agreement occurring within a twelve-month period, for which the franchisee has been given notice and an opportunity to cure as provided in this subsection,” when another willful and material breach of that term follows within that period.

Which state’s cure period applies to a multi-state franchise system?

Each of the seven statutes voids certain contract terms that would avoid it, and Minnesota’s termination rule is not categorically limited to Minnesota franchisees. A system with franchisees in several states can owe a different cure period to each.

The reach and anti-waiver rules, in each statute’s words:

• Minnesota protects, against waivers, a franchisee who was a Minnesota resident when acquiring the franchise, a Minnesota partnership or corporation, and a person acquiring a franchise “to be operated in this state” (§ 80C.21). In Cambria Co. v. M&M Creative Laminants, Inc., No. A22-0723 (Minn. Sept. 11, 2024), the Minnesota Supreme Court held that the Act “does not categorically preclude an out-of-state company from enforcing a claim for unfair practices under section 80C.14,” though not “every out-of-state company,” in a case where “the parties’ contract, drafted by Cambria, includes a Minnesota choice-of-law provision.”
• California’s chapter applies “when either the franchisee is domiciled in this state or the franchised business is or has been operated in this state,” and a waiver of it “shall be void and unenforceable” (Cal. Bus. & Prof. Code § 20015).
• Illinois reaches “a franchise of a franchised business located in this State” (815 ILCS 705/19), and voids any provision “purporting to bind any person acquiring any franchise to waive compliance with any provision of this Act or any other law of this State” (815 ILCS 705/41).
• Iowa’s section applies to a franchise “operated in this state and that is subject to an agreement entered into on or after July 1, 2000,” and a provision “requiring the application of the law of another state in lieu of this section is void” (Iowa Code section 537A.10).
• Michigan voids “A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in this act” (MCL 445.1527).
• Washington voids “Any agreement, condition, stipulation or provision, including a choice of law provision, purporting to bind any person to waive compliance with any provision of this chapter or any rule or order hereunder” (RCW 19.100.220).
• Wisconsin protects a dealer, defined as “a grantee of a dealership situated in this state” (Wis. Stat. section 135.02), and provides that “The effect of this chapter may not be varied by contract or agreement” (Wis. Stat. section 135.025(3)).

The Illinois, Michigan, and Washington provisions each carve out certain settlements of claims.

Wisconsin’s statute speaks of dealerships rather than franchises, so a franchisor should check its relationship against that chapter’s own definitions. This page covers seven states; for a franchisee elsewhere, I suggest checking that state’s statutes before relying on the agreement’s default clause alone, because a state statute can override the clause. A franchisor registering or selling in Minnesota also has the separate registration and disclosure rules to follow.

What should a default notice include to work in every state?

A default notice meant for any of these states should be written, list every reason, state a cure period that meets the governing state’s minimum, say what a completed cure requires, and set a termination date that meets that state’s notice period. The writing, the reasons, the cure period, and the notice period each come from at least one of the statutes, and describing the completed cure is my suggestion. I suggest a state-specific schedule rather than a single number, because the minimums and caps conflict.

A notice built on the statutes above would include:

1. Every reason, in writing. Minnesota and Wisconsin both require a written notice that states all the reasons. I suggest using that form for every state, because you then need not decide which state’s content rule applies before writing the notice.
2. The cure period for each statute that may reach this franchisee. Minnesota and Wisconsin require 60 days, California at least 60 and no more than 75 absent a separate agreement, and Iowa 30 to 90 (30 for nonpayment). Illinois, Michigan, and Washington set 30 days as the most a franchisor must give, and Washington adds its rule for defaults that cannot reasonably be cured in thirty days. Under Cambria, discussed above, the Minnesota Act does not “categorically preclude an out-of-state company from enforcing a claim for unfair practices under section 80C.14,” and that case involved a contract with a Minnesota choice-of-law provision.
3. What a completed cure looks like. I suggest naming the amount, the standard, or the document, so both sides can tell whether the default was corrected.
4. An effective date that meets the notice period. That is at least 90 days in Minnesota and Wisconsin, and at least 60 days in California.
5. The state’s exceptions, if you rely on one. I suggest citing the specific ground, such as Minnesota’s 24-hour notice for a goodwill-impairing default or California’s five-day rule for unpaid fees.
6. The money that changes hands at the end. In Washington, “Upon termination for good cause, the franchisor shall purchase from the franchisee at a fair market value at the time of termination, the franchisee’s inventory and supplies,” subject to the exclusions in that subsection. In California, “upon a lawful termination or nonrenewal of a franchisee, the franchisor shall purchase from the franchisee, at the value of price paid, minus depreciation, all inventory, supplies, equipment, fixtures, and furnishings purchased or paid for under the terms of the franchise agreement or any ancillary or collateral agreement,” subject to the exclusions in Cal. Bus. & Prof. Code § 20022, which was last amended effective January 1, 2023. Section 20022 was added by a 2015 act, Assembly Bill 525, which also amended section 20041 to provide in subdivision (b) that the act’s amendments “shall apply only to franchise agreements entered into or renewed on or after January 1, 2016, or to franchises of an indefinite duration that may be terminated by the franchisee or franchisor without cause.” In Wisconsin, “If a dealership is terminated by the grantor, the grantor, at the option of the dealer, shall repurchase all inventories sold by the grantor to the dealer for resale under the dealership agreement at the fair wholesale market value,” for merchandise with a mark that identifies the grantor (Wis. Stat. section 135.045).

A negotiated exit is sometimes the faster path. In one matter, a franchisee I represented paid the overdue fees at one store in full and negotiated a voluntary termination agreement with the franchisor so that a new company could take over the store under its own franchise agreement. Minnesota’s rule against required releases leaves room for that kind of voluntary settlement. Section 80C.21 has no settlement carve-out in its text: it voids any provision that “has the effect of waiving compliance” with the Act for a franchisee it protects. A sale to a qualified buyer is another option, governed by the rules on consent to a franchisee’s sale.

Next Steps for a Franchisor Facing a Default

Before sending a default notice, a franchisor should confirm which states’ statutes may reach the franchisee, keeping in mind that Minnesota’s termination rule is not categorically limited to Minnesota franchisees, list every default in writing, and set the cure period and termination date to each applicable state’s numbers. In Minnesota, that means good cause, a written notice stating all reasons at least 90 days before termination, and 60 days from receipt for the franchisee to correct them, unless one of the three grounds that make the notice effective immediately applies, under Minn. Stat. § 80C.14, subd. 3.

If you would like me to analyze a default notice before you send it and tell you whether it meets the cure rules of the franchisee’s state, email [email protected] with a brief description of the situation. More on Minnesota franchise relationships is on my franchise practice page.